Notebook ODM Compal Electronics will gradually move notebook production capacity at its factory in Chengdu City, western China, to its factory in Kunshan, eastern China, and has notified its component makers of the plans, according to notebook supply chain makers.

Compal has not confirmed the move but said that it will adjust production capacity depending on orders.

The shift of production capacity is mainly because Lenovo and Dell, Compal's two largest ODM clients, have decreased notebook shipments from Compal's Chengdu factory, the sources said.

Starting production in January 2011, the Chengdu factory was originally expected to increase notebook shipments to 20 million units in 2013 mainly due to expected orders from Lenovo and Dell, the sources indicated. But the factory did not attain the 2013 target shipments because Lenovo shifted ODM production from Compal to LCFC (Hefei) Electronics Technology, a joint-venture set up by Lenovo and Compal, and Dell decreased notebook shipments from western China and increased those from eastern China, the sources noted.

After the move, the proportion of Compal's total notebook production capacity in Kunshan will rise to 70%, the sources said.

Since Compal's component makers are mostly based in eastern and southeastern China, the movie will make it more convenient to supply Compal, the sources indicated. In addition, the move will help Compal obtain ODM orders from some notebook vendors which prefer distributed production capacities to reduce risks, the sources said.

In contrast, Taiwan-based notebook ODMs, Quanta Computer and Inventec have large portions of their total production capacity based in Chongqing City, western China, and Wistron is considering doing so, the sources noted.