At the investor conference on August 24, the Vice President of Quanta Computer Inc. (2382), C. C. Leung, expressed that the company will continue on vertical integration.  Yesterday QCI announced to subscribe to Ability Opto-electronics Technology’s private placement at the unit price of 11.95, and expanded its vertical integration to camera module maker.  QCI acquired a 3.9% stake in the shareholding.

QCI subscribed to Ability Opto-Electronics Technology’s private placement in the volume of 3 million shares at the unit price of 11.95.  The market price of Ability Opto-Electronics Technology Co. has significantly surged about 200% since March, and yesterday it surged by its 7 percent daily limit to NT$ 32.1 on the Taiwan Stock Exchange.

The second quarter financials of QCI has reported solid growth. In the consolidated reports, after adjusting the sales revenue of Taiwan and China plants, the gross margin has surged to 3.4%.  QCI indicated that the successful vertical integration is a major contribution to profit increase.

Quanta vertically integrated Quanta Storage Inc., a CD-ROM drive plant, and the casing and mechanical-part plants in ChangShu.  It also invested in notebook battery module maker, Simplo Technology Co., Ltd.  Quanta spokesman Elton Yang believed Quanta have made more efforts than its competitors in building its vertical integration without announcement.  Public became aware of it when significant result was achieved.

There are other notebook OEM manufacturers that also expand their vertical integration into camera modules makers.  Hon Hai has acquired Premier Image Technology Corp., and Asus has invested in Canon.

Lately the competition of QCI and Hon Hai Precision Industry Co. has intensified.  It was a coincidence that earlier Hon Hai had invested in Advanced Optoelectronic Technology Inc., a LED downstream packager, whose name in Chinese is similar to that of Ability Opto-electronics Technology Co.  The investors at that time mistakenly purchased the shares, and caused stock price of Ability to rise the 7 percent daily limit.