Acer Labs looks to China

Based in Taipei, ALI operates as a fabless design house that offers a variety of integrated circuits (ICs), including a number of core logic products, PC peripherals and an expanding multimedia line. The vendor is an affiliate of Taiwan PC maker Acer and is one of the five largest fabless design houses in Taiwan -- a segment expected to generate close to $US3 billion in revenue by year end, according to industry experts.

ALI executives recently voiced intentions to up activities in China, hoping to benefit from lower labor and real estate costs. While the company currently has 600 employees, ALI expects to hire 400 new workers by the end of 2000 and said that the dramatic increase in staff comes as a result of its China-related efforts.

"The market is tremendous in China," John Shih, president of ALI's US division, said.

Shih said lower costs in addition to sound technology and the obvious lack of a language barrier make China ripe for production of certain ALI products. The vendor will hire local workers for its Chinese operations and concentrate on utilising software resources from the mainland to further IP development along with market expansion. The proximity of the two countries should also lower both distribution costs and delivery time, said Shih.

In addition, ALI looks to China as a strong buyer's market for a number of its products. "The PC growth rate is higher in China than anywhere else in the world," Shih said.

ALI hopes that the PC system chipset arena along with multimedia and internet appliance (IA) technologies will lead the way for its future growth. Shih believes that the demand for these technologies will increase in China in the near future.

While his company posted close to a 50 per cent revenue growth rate over the last five years, Shih said he feels that 20 per cent growth will be a more manageable target in the years to come. ALI recently released a new version of its SDRAM (synchronous dynamic random access) chips that provide close to twice the bandwidth of the previous memory type. The DDR (double data rate) SDRAM will support a number of mobile and desktop PC processors, including products from both Advanced Micro Devices (AMD) and Intel. While Intel has been slow to jump on the DDR bandwagon, ALI believes that the higher bandwidth and lower power features of the chipset will aid the functionality of portable devices. "We believe that DDR is the winning solution," Shih said.

Shih said the DDR products should help his company meet goals in the graphics and IA segments. The vendor also formed a communications division in August to handle customers' requests for wireless products.

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Ashlee Vance

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