Linksys to expand procurement from Taiwan

Las Vegas, Nov. 19, 2003 (CENS)--Linksys of the United States, a globally leading brand of small office, home office (SOHO) networking equipment, recently claimed that it would jump into the family entertainment market early next year and compete with such big international brands as Sony, Samsung and Philips etc.

Linksys said that it procured about US$400 million from Taiwan this year and the figure would greatly grow next year. All all of Linksys' current 13 contract partners in Taiwan would enjoyed increased orders from the firm next year and Hon Hai Precision Ind. Co. Ltd., the largest private manufacturer in Taiwan, is expected to join Linksys' supply chain in the future, according to industry sources.

Linksys is currently the world's top supplier of wireless local area network (WLAN) equipment with a 53% share of the North America market in the first three quarters this year. Linksys was acquired by Cisco System Inc. of the U.S. for US$500 million early this year, but the company still maintains its original brand and utilizes Cisco's sales channels worldwide to market products especially in the Europe and mainland China markets.

Victor Tsao, Cisco vice president and Linksys president, CEO and co-founder, once announced that Linksys' cooperation ties with Taiwanese contract suppliers would remain unchanged after its merger with Cisco.

According to Tsao, Linksys had revenue of US$440 million last year and the figure is expected to grow significantly next year. The vice president also predicted that Linksys' annual revenue would reach US$1 billion in the coming one to two years and the company's procurement value from Taiwan would also grow simultaneously.

Tsao said that the wireless family entertainment items have totally become consumer electronic products and the rising business has attracted a group of leading international brands, including Sony, Samsung, Philips and Simens etc., to jump into the sector. In a bid to become a global leader in the rising arena, Tsao said that Linksys is scheduled to push new products in the first quarter next year.

In cooperation with such contract suppliers in Taiwan as CyberTAN Technology Inc., Sercomm Corp. and GemTek Technology Co., Ltd., Tsao said that Linksys has developed several wireless family entertainment products ready for the market.

According to Tsao, those newly developed products include wireless media converters that could transmit images and music sounds from personal computers to TV or stereo equipment for broadcasting; wireless transmission devices integrated with digital versatile disc (DVD) players; and wireless networking digital video camera/recorder for family security inspection applications etc. Such new items, Tsao claimed, would wirelessly connect all the electronic products at a family and develop more and newer applications for family entertainment products.

Tsao said that Linksys currently has 13 contract suppliers in Taiwan and place relative-big volume orders with about five to six of them. Linksys procures all of its products from Taiwan, with a very small part of the items shipped from suppliers' plants in mainland China. Tsao claimed that Linksys would maintain close cooperation ties with the Taiwan suppliers at least to next year and procurement items would expand from mainly traditional networking switches and routers to wireless family entertainment items.

Asked about that whether Linksys would contract Hon Hai, the world's largest maker of barebone PCs, connectors and video game consoles, to supply some products, Tsao said Hon Hai is a very strong contract electronics manufacturing (CEM ) company with almost unmatched capability in big-volume production and is expected to own even-stronger original design manufacturing (ODM) capability after its recent acquisition of the Ambit Microsystems Corp., a maker of thin film electronics and integrated circuit (IC) chips.

Tsao said that Linksys has tried to contact Hon Hai for possible contract production of some items, but the two companies have to further negotiate on cooperation details as Linksys' products target mainly at the consumer market and are especially suited for production in small volume but with a large variety.