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Monday, July 11, 2005

Lenova's acquisition has impact on global supply chain

An acquisition means that a company is buying market share. The challenge then is to keep the share while integrating the acquired part into the core business. Frequently, this acquired market share actually gets lost over time.

The acquisition of IBM's PC business enabled Lenova to take a leap to ninth place in the global chip purchasing ranks this year - chips that are put inside PCs this year. iSuppli, the company that publishes these data, says that Lenovo will require around US$4.27 billion worth of semiconductors to put inside PCs this year, up from US$1.01 billion. This tremendous growth pushed the company from 36th place in 2004 to the mentioned 9th position in 2005.

The effect of this? A revamp of the "entire supply chain of the computer industry, and could cause changes leading to job losses and corporate decline in some places, while new areas prosper," with a continuous shift of production facilities to Asia.

Ever thought that an acquisition could have such an impact on other companies?

(By Asia Business Consulting)