AsusTek SWOT and PESTLE Analysis

Strength

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Weakness

1. Dependency on Intel for crucial parts supply leading to loss of business: Asus is the world's largest motherboard supplier, mainly because of its long-term association with Intel. Intel dominated the CPU production market whereas Asus crafted the motherboards. However, this dependence on Intel never allowed Asus to venture into upstream business (chip making business) and remained restrained to the mid-stream and downstream production business. Since late 2018, Intel started facing severe shortages for its 14 nm CPU which is crucial for Asus’s PC builder business. This led to decline of profits of Asus by 39% y-o-y. Infact in Q4 2018, the shortage became acute dipping to an all-time low of 20%, from the average 50% in the past years. This prompted OEM makers to shift to AMD platforms for motherboard manufacturing but AMD already has motherboard manufacturing facility and AMD CPUs are less acceptable in many markets.

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Opportunity

1. Grow in the cloud-computing arena: Cloud computing is expected to see the next boom in the near future: It involves datacenters, servers and workstation supply and maintenance. Apart from that it also requires development of AI infrastructure and interfacing systems. With the insurgence of Covid-19, the work from home culture is about to grow in a big way. Even healthcare sector would require cloud computing. The global cloud computing is poised to be worth over US $600 billion with CAGR of 18%. It is going to be a booming sector in coming days. Asustek has huge brand equity in the world of computing. It has 20 years of experience in server and workstation production. It already provides cloud services to the Taiwanese government. With the brand image Asus can look to acquire a major share in the growing cloud computing market. It has recently gone into several collaboration in this sector, such as the one with Certis, where Asus would provide technology solutions to Certis to develop AI and cloud computing infrastructure. Asus can leverage its product manufacturing and service providing expertise to grab a major share in this market.

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Threats

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Political

1. India US China Trade brining mixed bag for Taiwanese companies: The US China Trade war has led to disruption in business for most of the companies active in China or US. There had been continuous spikes in import duties in both the nations, going as high as 25%. Asus has manufacturing facilities in China. Asus deals in two kinds of businesses, which are high-value/low-volume products and low-value/high-volume products. Asus and other Taiwanese companies shift most of the productions of their high-value/low-volume products in Taiwan. As China's labour cost is rising with every passing day and it would go into a population decline post 2030, moving the low volume production in automated Taiwanese infrastructure would benefit such companies in long as well as short terms. Both US and China has tax relaxations for goods produced at Taiwan, although some heat had to be taken by American customers. In low-value/high-volume products like smartphones and laptops, the company has to rely upon Chinese labour, which eventually affected the outreach of American market. A longer Trade war would compel Asustek to venture out into new manufacturing arenas in other nations like Vietnam, Korea and etc.

Economic

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Social

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Technological

1. Healthcare to use technology extensively: With the current rise of pandemic if Covid-19, most of the countries are in race of enhancing their medical systems and want to increase usage of technology. Healthcare cloud computing and health equipment will have huge demand in upcoming years. Asus is already there in the business of healthcare automation and IOT. The novel Corona virus outbreak has highlighted newer tools that would help market expansion of technology products in the healthcare sector. ASUS VivoWatch and ZenFone Max Pro smartphone enabled real-time management of health monitoring. Moreover Asus is also working on the development of robots for domestic purposes. Doctors have recently admitted that the usage of automation and robotics healthcare could have making the fight against coronavirus less intense. With integrated medical and domestic robotics, penetration into a new market would develop in the era of social distancing.

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Legal

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Environmental

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