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October 16, 1995

TULIP COMPUTERS TO ASSEMBLE IN CHINA

By CBR Staff Writer

Tulip Computers NV has pushed forward its plans to conquer the Far Eastern markets, and plans to open a production line in China early next year for the Asian market. We’re working hard to start production in Asia and it’s likely to be in Shenzhen, China, executive director Rob Romein told Reuters in an interview, adding Hong Kong was also an option. The new assembly plant will be set up with a local partner and should come on stream in the first quarter of next year. It will have output capacity of several tens of thousands of units a year, he said. Overall, the company looks to make 250,000 to 300,000 machines this year, after a rise of 44% in the first half of the year. It has already opened two sales offices in China this year.The Chinese line would as semble the computers using mother boards from the Netherlands. Back home in Den Bosch, the Dutch company is radically reshaping its image, and an advertising blitz will back up its launch of a new line of low noise, low power consumption business personal computers, and its integrated home computer with television. Tulip generates around 95% of its sales in the professional market, and just 5% in the market for small offices and homes, although the new machine is seen taking that to 15% next year. The company will start deliveries of the Universa television computer this week and expects to sell 7,000 units this year. The company has also just started portable personal computer production, using Philips Electronics NV’s Featron Ltd in Taiwan. Tulip will assemble the notebooks back home, Romein said. In 1996 we expect to generate eight to 10 percent of our sales from notebooks, he added. Tulip aims to increase unit output by 35% each year in order to survive and the big new plant in the nearby town of Rosmalen, to be ready by mid-1996, will integrate assembly activities and Tulip’s capacity for complete machines will more than double to 600,000.

Pentium Pro

Tulip has no trouble selling its units, Romein said, rather Production has been our biggest problem, he said, pointing at a series of difficulties with component deliveries linked to the launch of Microsoft Corp’s Windows95. Windows95 is such a huge program that we can no longer load operating systems in several languages on the hard disk and activate the relevant one when a PC is ordered, he said. It now has to wait for the orders before it loads. We could have sold more if we had been able to make more, he said, adding that memory chip shortages had been a problem. One area where Tulip plans to rely on others is servers, and most of the manufacturing process for these will be contracted out. The gross margin on the company’s servers is estimated at nearly 50% or about double that for desktop personal computers. Research and development for servers has been difficult and we have asked foreign partners to assist in some parts of that production, such as remote management software development and testin g, said Romein. With the new Pentium Pro processor coming up this quarter, Tulip is also considering buying complete P6 boards for its servers until it has developed its own P6 motherboard by the third quarter of 1996, he said – but everyone will have to do that because Intel Corp will initially sell the chips only on boards it assembled – eating into vendor margins.

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