Press Room
Cool-Down of Replacement Demand Reduces Notebook PC Momentum in Early 2004
April 28, 2004
- Taiwanese Notebook PC shipment reached approximately 6.8 million units in the first quarter of 2004, a slide of 16.3% sequentially due to seasonal effects and less-than-expected demand. However, as 2004 remains an important period in the replacement cycle, shipments grew by 32.9% year on year.

The continuous increase of full system share, plus the price hikes on components such as DRAM (Dynamic Random Access Memory), batteries, PCB (Printed Circuit Board), some passive components, and raw materials such as plastic, gave ASP (Average Selling Price) a slight increase. Shipment value grew 26.7% year on year to around US$4.5 billion, but suffered a 15.8% decline sequentially due to the large slide in shipment volume.

The tremendous growth in the notebook PC market during the fourth quarter of 2003 boosted the optimism of certain brand name vendors such as HP and induced them to pour in massive supply. Given the less-than-expected demand, inventories increased sharply, impacting Taiwanese makers' shipment performance. Shipments of 15-inch and 17-inch models declined by 1% to 2% sequentially, while all-in-one models suffered a drop of more than 10%, evidence of the slow-down in desktop replacement demand in the consumer market during the first quarter of 2004.

First tier makers still accounted for more than 60% of total shipment volume in the first quarter of 2004. However, the massive inventory pile-ups among brand name vendors such as HP curbed the shipment of the first tier makers that receive orders from them, causing a 2.2% drop in first tier share and a share increase for second tier makers. In contrast to the relatively stable ranking of first tier makers, the ranking of second tier makers underwent a dramatic shift between the fourth quarter of 2003 and the first quarter of 2004.

In the second quarter of 2004, the heavy inventories among brand name vendors are expected to be relieved. The shipment of the next-generation CPU, Dothan, along with Intel's promotion of its new naming strategy, will bring forth some stimulation to market demand. The shipment volume of notebook PC in the second quarter is thus anticipated to increase by 10.1% sequentially.