Shipment volume of Taiwanese contract manufactured smartphones topped around 60.86 million units in the second quarter of 2014, up 22% sequentially and 31% year-on-year. "The skyrocketed growth is attributed mainly to Xperia E1 and M2 smartphones shipped for Sony and the increased shipments for Xiaomi Red Mi Note and other models," says Sean Chiang, mobile communications analyst with MIC (Market Intelligence & Consulting Institute). On top of that, Foxconn's shipments for Motorola Moto E also began shipments in the second quarter of 2014 and are schedule for more in the upcoming quarters.
Taiwanese Mobile Phone Shipment Value and ASP, 1Q 2012 - 4Q 2014
Source: MIC, August 2014
As Taiwan's shipments for iPhones dwindled in the second quarter and the share of mid-to-lower smartphones shipped for Sony and Xiaomi increased, ASP (Average Selling Price) slipped by 5% to US$181 in the second quarter of 2014. Bolstered by strong shipment volume growth, the industry's shipment value still grew in the second quarter to about US$11 billion, up 18% sequentially.
Looking at brands' relationship with Taiwanese contract makers, Xiaomi who has seen rapid growth these years has become the largest client of Inventec and the second largest client of Foxconn. Additionally, Inventec and Foxconn have earmarked massive investment for infrastructure of existing plants to tap rising demand for shipments to Xiaomi. This reflects that Xiaomi's relationship with Inventec and Foxconn remains steadfast. Therefore, switching to a new contract manufacturer is costly and unlikely for Xiaomi, as it could cause poor yields and the manufacturing of its new model is rather complicated. Foxconn not only manufactures and assemblies the Xiaomi products but also provides metal chassis for Xiaomi 4. "MIC predicts that over 50% of the Xiaomi products will be manufactured by Foxconn in 2014," say Chiang.
The new iPhone is officially set for launch on September 9. Foxconn is the sole maker for 5.5" iPhone 6 while 70% and 30% of 4.7" iPhone 6 are manufactured by Foxconn and Pegatron, respectively. As its effort to keep pace with demand, Apple will outsource the making of iPhone 5C to Wistron, another Taiwanese smartphone contract maker.
Despite of the fierce competition from Chinese local brands such as Xiaomi and Huawei, MIC estimates that Taiwanese contracted manufactured smartphones for Apple will remain robust in 2014. The combined shipments for 4.7" and 5.5" iPhone 6 in 2014 is estimated to be 30% more than that for iPhone 5S and 5C in total, according to MIC.
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Market Intelligence & Consulting Institute (MIC), based in Taipei, Taiwan, was founded in 1987. MIC is Taiwan's premier IT industry research and consulting firm providing intelligence, in-depth analysis, and strategic consulting services on global IT product and technology trends, focusing on markets and industries in Asia-Pacific. MIC is part of the Institute for Information Industry. https://mic.iii.org.tw/english