Slowdown, shortages in key components in focus at Computex

By Baker Li

TAIPEI (Reuters) - A shortage of electronic components such as chips and displays threatens to derail a nascent recovery in Asia's technology sector spurred by China's stimulus plan.

At the Computex trade show in Taiwan this week, electronics companies including Acer and Asustek Computer will showcase their latest gadgets to tempt buyers wary of spending as a global recession pinches.

In the last few months, China's $600 billion stimulus spending has driven a recovery in Asia's tech sector, especially in Taiwan, as China moulds itself into an electronics consumer and not just an exporter.

But many tech companies, especially makers of memory chips and displays, have sharply trimmed output since late last year or were too cash-strapped to invest in new production equipment in the sector's downturn, leading to shortages of key components.

"Tight supplies are creating a headache for many computer vendors," said Alex Huang, vice president of Taiwan's Mega International Securities.

"So it remains a question mark if you ask me how strong the recovery will be in the next few months."

AU Optronics Corp, the world's No.3 maker of LCD panels for PCs and flat-screen TVs, said it has a shortage now and can only meet 70 percent of its orders even if it runs at full capacity in the next three months.

It's a double blow as many leading PC companies have seen their profit margins weaken as they sell more cheaper netbooks -- some of them small enough to slip into a purse.