Google and Asustek will unveil a 7-inch co-branded tablet PC as early as May, with the model targeting Amazon's Kindle Fire and to be priced at US$199-249, according to industry sources.

In response, Asustek declined to comment.

Google sought Taiwan-based co-brand partners at the end of 2011, the sources noted. Among potential partners, HTC had strong design capability but insisted on directing development of the co-brand model and was unwilling to develop a low-price model to impair its brand image, while Acer did not have in-house R&D capability, the sources indicated. Google finally selected Asustek because of its ODM capability and good product quality, the sources claimed.

Asustek's motivation for cooperating with Google is to win Google's confidence to facilitate development of its Android-based devices, learn Google's technology to develop software and content, as well as enter the tablet US market, the sources indicated.

The co-branded tablet PC is expected to be the first using Google Play Store, the sources noted.

Asustek on March 8 reported revenues of NT$27.598 billion (US$931 million) for February, growing 26.49% on month and 94.03% on year. January-February revenues of NT$49.417 billion hiked 45% on year.