Taiwan-based notebook ODM Compal Electronics is negotiating an increase in ODM prices by 5-15% with clients, with the adjustment needed to reflect ongoing wage hikes in China and expected to take effect after the 2015 Lunar New Year holiday in late February, according to company president Ray Chen.

Compal had weak gross margins and operating profit margins for the third quarter of 2014 as its US-based clients launched new products, which required the ODM to spend extra resources to recruit sufficient workers for related production, Chen said, adding competition for workers between IT players has always been fierce.

Chen expects Compal's gross margins to rebound in the fourth quarter, but China's minimum wage increases of about 10-15% per year will continue to heap pressure on the company.

Most of Compal's fellow ODM competitors declined to say whether they will also raise quotes, but some said that they are still in talks with clients about shifting some of their labor costs to them.