Lenovo and Compal Electronics' joint venture in China has recently started outsourcing its front-end manufacturing to China-based notebook OEMs, aiming to quickly raise its capacity, according to sources from the upstream supply chain.

　　However, the strategy is expected to affect Taiwan-based ODMs, which still have available capacity currently.

　　Lenovo and Compal originally planned to ship 10 million notebooks in 2013 from the joint venture, and will ship double in 2014, but even with Compal's full support in technology and management, the joint venture will still have trouble achieving the shipment goal, the sources noted.

　　Although Taiwan-based ODMs used to outsource their front-end manufacturing to China OEMs, the strategy was meant to adjust their capacities. However, the joint venture is instead aiming to nurture the local supply chain and could greatly impact Taiwan-based ODMs.

　　In addition to Lenovo, Samsung Electronics reportedly is also planning to take back its orders from Taiwan-based ODMs and will establish factories in Vietnam.

　　Currently, Taiwan ODMs are seeing the most serious impact in their mid-range to entry-level product orders since China OEMs are offering cheaper quotes and starting to demonstrate improvements in technology. The threat is gradually expanding to the high-end and ODM orders, the sources added.