TAIPEI (Taiwan News) — Pegatron Chair Tung Tzu-hsien (童子賢) on Wednesday dismissed concerns raised in an investment research report claiming surging memory prices would hurt the company and other Taiwanese contract manufacturers, per CNA.

Speaking at the Monte Jade Science and Technology Forum, Tung questioned the report’s findings, saying major global brands typically control allocation of key components. Contract manufacturers act only as agents, he said, meaning fluctuations in component prices have a limited impact on their operations.

The US-based investment firm’s report warned that rising memory prices could squeeze profitability across the hardware supply chain. Tung, however, said he remains optimistic about memory pricing trends, noting that global IT brands often maintain control over components such as memory, CPUs, and display modules when outsourcing production to Taiwanese manufacturers.

Brand owners, he said, make key sourcing and negotiation decisions, while contract manufacturers handle intermediary tasks such as making advance payments for components and later being reimbursed. “In this regard, fluctuations in the price of key components are actually irrelevant to the operations or profitability of contract manufacturers,” he said.

Tung said memory prices rise only when supply and demand become imbalanced. He is currently observing strong market demand, citing substrate shortages faced by Pegatron's subsidiary, Kinsus (景碩), over the past six months. The company has asked substrate suppliers in South Korea, Japan, and Taiwan to expand production, he added.

He described the current memory boom as part of a familiar industry cycle. Memory makers may increase production shifts from one to two or even three to meet demand, he said. Long-established manufacturers such as Quanta and Compal have weathered such cycles repeatedly over the decades, he added.

“I believe the Taiwanese electronics industry will have no problem handling this cycle,” Tung said.

Commenting on Pegatron’s overseas production strategy, Tung said one major factor in selecting factory locations, including the US, Mexico, India, and Vietnam, is local energy and power infrastructure. Texas currently offers the most complete energy system among US bases, he said, followed by California. However, the latter’s high labor costs push many Taiwanese firms to consider Arizona or Texas instead.

Earlier in the day, Tung attended the listing ceremony for subsidiary ASRock Rack, calling the debut a sign of the continued growth of Taiwan’s IT sector. He said the Pegatron Group has several more promising companies preparing for future listings.