Acer sees big growth in China, tablet market

TAIPEI, TAIWAN: Acer, the world's No.2 PC vendor, expects its China operations to make up more than 20 percent of its total sales in five years, helped by new tablet PCs and an alliance with China's Founder Technology.

As one of Taiwan's few internationally recognizable computer brands, Acer is betting heavily on its growth in the tablet computer market where it joined other rivals to compete with Apple's widely successful iPad.

Also read: Acer unveils Android Windows based tablet PC

"Tablet is a huge market and it shows a new path for new growth," Acer Chairman J.T. Wang said during the Reuters China Investment Summit.

"For Acer, we want to become a significant player as soon as possible," Wang said in an interview at the company's headquarters.

Acer aims to capture a 15-20 percent share of the global tablet PC market next year, said Wang, whose company unveiled a range of its own tablet computers last month.

Also read: Acer plans to use Windows OS in smartphone

Analysts expect worldwide tablet PC sales to reach 40-50 million units in 2011, with the iPad dominating the market. Research firm IDC has said tablet shipments could grow by an average 57.4 percent per year in 2010-2014, reflecting the sector's huge growth potential.

That would also help boost Acer's China revenue to $2.5 billion in 2011 from $1 billion this year, he said. China operations account for 7 percent of Acer's total sales now.

When asked about the impact from an appreciating yuan currency, Wang said: "In China, purchasing power will increase significantly in the next few years and PCs will become cheaper."

In late October, Acer, which also sells smartphones, forecast its fourth quarter sales would grow 5-10 percent and its branded PC revenue would grow 10-15 percent next year, driven by growing demand from China and emerging markets.

Acer, whose operating profit margin stood at 3.2 percent in the July-September quarter, will see the margin stable at about 3 percent next year, Wang said.

Investors have bought into Acer's solid fundamentals, pushing the stock to a more than eight-month high last week.

Analysts expected Acer to book revenue of T$758 billion ($25 billion) in 2011, up 14 percent from this year, and will grow another 13 percent into 2012, according to forecasts from Thomson Reuters I/B/E/S.

For Wang, getting bigger is a survival issue.

Earlier this year, Acer announced a strategic alliance with Founder Technology to beef up its presence on the mainland, including paying $67.5 million for use of Founder's PC-related trademarks for seven years.

After a restructuring plan to drop out of contract manufacturing to further develop its own brand in late 2000, Acer also acquired PC rivals Gateway and Packard-Bell, dramatically expanding its footprint in the United States.

By unit shipments, Acer had a 13 percent share of the global PC market in the third quarter of 2010, trailing only Hewlett-Packard's 17.6 percent, according to research firm IDC.