Japan-based PC brand vendors Vaio (previously Sony), Toshiba and Fujitsu reportedly are ready to merge their notebook businesses into a company, a move which will affect Taiwan-based notebook ODMs, particularly Pegatron Technology, according to sources from the upstream supply chain.

Pegatron received over 50% of Toshiba's notebook orders in 2015 and has also led other rivals to win over 50% of the vendor's request for the quotation (RFQ) for notebook orders for 2016, the source indicated.

However, Pegatron has recently been notified by Toshiba to halt production of 300,000 units of mainstream models which are scheduled to be shipped soon, indicating that the merger talks between the three Japan-based companies are likely to be finalized shortly, said the sources. Pegatron declined to comment on its orders.

Which company will become the surviving company will lead to a shift of ODM orders to Taiwan makers as Vaio and Fujitsu work closer to Quanta Computer, the sources indicated, noting that Quanta also manufactures server products for Fujitsu.

Quanta shipped 43.3 million notebooks in 2015 and is expected to see its notebook shipments decline 5-9% on year to 39.4-41.2 million in 2016, the sources estimated.

Viao, Fujitsu and Toshiba are likely to account for 30% of Japan's notebook market after integration, compared to 29% held by NEC/Lenovo joint venture, the sources noted.