Samsung May Be Gearing Up to Purchase HP's PC Division

If insider reports are true, then Samsung Electronics may be gearing up to purchase HP's Personal Systems Group if the offer is brought to the table.

According to "upstream vendors" in the PC component industry, the Korea-based company invited Taiwan-based notebook makers (and top HP notebook contractors) Quanta Computer, Compal Electronics and Pegatron Technology to its headquarters in South Korea earlier this month "with a rather cautious attitude." Sources believe this meeting was an indication that Samsung might be preparing to expand its business with the acquisition of HP's Personal System Group.

If Samsung does indeed purchase HP's PC division, then it would outsource a small volume of orders to these specific players. Right now Samsung pumps out around 10 million laptops annually via its manufacturing plants in China, but that could increase to 50 to 60 million if the purchase of HP's PC division becomes official.

"The sources pointed that the Taiwan's notebook OEM industry's production efficiency and cost control is currently unmatched worldwide," Digitimes reports. "Therefore, if Samsung takes over HP's PC department, HP's over 40 million PC shipment volume will still need to depend on Taiwan OEMs. However, related suppliers of components such as panel, memory and battery may be affected as Samsung has a rather strong vertical integration supply chain."

Without commenting on the report, Quanta Computer told the paper that if Samsung takes over HP's 40 million units of PC shipments in addition to its own 10 million, the company will thus be shipping 50-60 million units total in one year and may have difficulty filling all these orders. Samsung will definitely need to find OEM partner, the company said.

Quanta added that it's currently working on upcoming cloud computing and related products to increase its non-notebook business' contribution. It's also cranking out 20 million units for HP's current 2011 fiscal year along with Foxconn Electronics (Hon Hai Precision Industry) which is shipping 8 million units, Inventec (7 Million), Wistron (3 to 4 million) and Compal (2 million).

Inventec also wouldn't comment on the report, but pointed out that HP's sudden announcement to part with its PC business seems more like an attempt to test the market's reaction, and the spin-off may depend on the results. Either way, Inventec won't be hurt by the outcome as it mainly produces HP's enterprise-class notebooks.