The Laptop Trail

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The Laptop Trail
The Modern PC Is a Model Of Hyper-efficient Production And Geopolitical Sensitivities By JASON DEAN and PUI-WING TAM, THE WALL STREET JOURNAL, June 9, 2005 When a customer in the U.S. clicks on Hewlett-Packard Co.'s Web site to purchase one of its Pavilion zd8000 laptop computers, the order quickly arrives thousands of miles away at a factory in China run by a less-familiar name, Quanta Computer Inc. Although virtually unknown to consumers, Quanta is the world's biggest maker of laptops. As part of a sometimes-difficult symbiosis, the Taiwanese company makes roughly one-quarter of the world's portable computers, which are then sold by brands such as H-P and Dell Inc. Quanta collects components from countries around the world and assembles them at its Quanta Shanghai Manufacture City complex. A look inside the making of a modern laptop PC shows how the process has evolved into the epitome of hyperefficient global production while also navigating a maze of corporate and geopolitical sensitivities. U.S. computer brands now farm out much of their manufacturing to Taiwanese concerns, which also are starting to design more of these products as well. The Taiwanese companies pull together parts to build the computers in China and then ship them to the purchaser, all in a matter of days. Within that finely tuned cycle is a series of delicate balancing acts. Big U.S. brands must weigh the cost benefits of extensive outsourcing against the dangers of ceding too much control to their suppliers, a system that could devolve into creating look-alike or perform-alike products. The contract manufacturers, meanwhile, are struggling with steadily shrinking profit margins as their U.S. customers press to cut prices. To lower labor costs, these Taiwanese assemblers have shifted almost all of their production in recent years to China, despite the continuing tensions between the two sides. Officials in Taipei and Beijing have yet to hash out a resumption of direct...
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