Share prices of Taiwan-based companies known to have strong business relations with Motorola staged a rally on August 16, one day after Google announced its plans to acquire Motorola Mobility as investors expect the deal will bring more orders for those companies. However, some industry watchers commented that Google may eventually release Motorola's hardware business, forcing Taiwan handset ODMs, and parts and components suppliers to face more uncertainties.
The deal should help improve the financial structure as well as business of Motorola, which will then release more orders to its production partners in Taiwan, said the sources, indicating the potential beneficiaries include Arima Telecommunications, Compal Communications, Merry Electronic, Ichia Technologies and Chi Cheng Enterprise.
Arima is currently a major ODM of feature phones for Motorola, while Compal and Foxconn International Holdings (FIH) are smartphone ODMs for the vendor. Motorola's focus on Android phones after being merged with Google will benefit all three ODMs, said the sources.
Motorola is expected to outsource a total of 11-13 million handsets to Taiwan ODMs in 2011, with more than 90% being feature phones, said the sources, indicating that shipments of smartphones to Motorola have more growth potential.
However, the sources pointed out initial orders from Motorola after being merged with Google are unlikely to increase substantially as Google has said it will run Motorola as a separate business and will treat all Android partners equally. This means that Motorola will be able to increase its orders to production partners if doing so remains competitive.
Motorola, operating as an independent handset vendor under Google, still also posts a potential threat to HTC and other Android phone vendors. Google is likely to compete directly with HTC or Samsung Electronics unless it sells or terminates Motorola's hardware business eventually, according to a Chinese-language Commercial Times report.