Acer reshuffles to avoid client conflict

Taiwanese computer giant Acer is spinning off its contract manufacturing arm to reassure its outsourcing clients, such as IBM and Dell, that it is not in direct competition.

Taiwanese computer giant Acer is spinning off its contract manufacturing arm to reassure its outsourcing clients, such as IBM and Dell, that it is not in direct competition.

Acer said last week that its design and manufacturing service (DMS) will be established as a wholly-owned subsidiary, which will operate separately from its own-brand PC manufacturing arm.

The company had originally announced plans to split into two separate companies. But problems with Taiwanese regulations had made this difficult to do, and setting up a subsidiary could be done quicker. The spin-off will take just six months, compared with an estimated two years for the original plan.

Stan Shih, chairman of the company, has yet to confirm who will be responsible for running the DMS subsidiary. The spin-off would have seen Acer co-president Simon Lin run the DMS with Wang Cheng-tang, the firm's second co-president, managing Acer's own-brand business.

Andy Brown, senior analyst at IDC, said he understood Acer's reasons for separating the businesses, but that the economic slowdown meant the spin-off was a viable alternative. "Manufacturing PCs for other companies is a feasible way of making money.

"In the current economic climate the firm wants to make sure it does not upset its partners. Spinning off the division does not create the formal separation Acer was looking for, but it is faster and should be enough to keep the IBMs and Dells of this world happy," he said.

No-one from Acer was available for comment at time of going to press.

Also published in Computer Reseller News