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ABIT to Outsource Manufacturing to Third Parties
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Old 22nd September 2005, 22:57   #1
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Default ABIT to Outsource Manufacturing to Third Parties

ABIT Computer, a maker of high-performance mainboards adored by computer enthusiasts, reportedly plans to outsource production of entry-level mainboards to third parties and sell its fab in China to other operators. The move may mean that the company is withdrawing from manufacturing and concentrates on engineering and marketing instead.

A news-story filed by DigiTimes web-site and citing the company claims that ABIT intends to outsource part of its manufacturing capacity, mostly entry-level production, to Elitegroup Computer Systems (ECS) by the end of October. Furthermore, the story claims that ABIT is in process of negotiations regarding selling off its plant in Suzhou province, China.

While ABIT could not be reached for comment, a filing with the Taiwan Stock Exchange (TSE) confirms that the company has planned to sell its plant.

“In response, except the management and operation of core products, overseas affiliates are planning to reduce the operation scale appropriately. The measures include disposal of overseas manufacturing plant,” the statement reads.

ABIT reportedly plans to outsource manufacturing of its high-end mainboards to the company that acquires its Suzhou plant. The negotiations are proceeding with a number of companies, according to the news-story.

“We have negotiated well performed, public listing company to enable out-contracting operation, so as to reduce the funding needs of their operations,” the filing claims.

When ABIT was commanded to change share trading pattern by Taiwan Security Exchange Corp. in 2004, the company suffered freeze of credit lines by domestic and overseas creditor banks and change of transaction modes with vendors, according to the company. In domestic part, after repeated negotiation with creditor banks, designating supervising Certified Public Account (CPA) and lawyer to audit, agreements have reached to release the freezing of credit lines. Still, transaction banks to the overseas affiliates still maintain the freeze after the responsible person of ABIT failed to go abroad and negotiate in person, the company said. The fact that an official from ABIT cannot go abroad may mean that he is under investigation.

“The problems of part of credit bank contracting financing credit lines, vendors changing transaction modes, pressure from redemption of corporate bond and the financial ration breaching the requirements under loan contract may impact the continuous operation of ABIT. Though ABIT has prepared with various solutions, it is yet to see whether the measures will solve the problem or not,” the company said in the statement with TSE.
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