The latest report from Market Intelligence Center (MIC), a Taiwan based intelligence and consultancy house, indicates that the Greater Chinese notebook PC industry’s shipment volume will exhibit healthy year-on-year growth in the third quarter of 2002, rising 27.2% to more than 4.6 million units. Shipment value will reach US$3.5 billion, with a noticeably slower growth rate of 13.4% year-on-year.

Shipment value growth rate will continue to lag behind that of shipment volume due to a decrease in ASP (Average Selling Price). The Greater Chinese notebook PC industry’s ASP has been steadily declining throughout 2002, falling from US$801 in the first quarter of the year to US$770 in the second quarter; that trend is expected to continue with a fall to US$760 in the third quarter.

Charles Chou, an Industry Analyst with MIC, explains, “One reason for the lower prices is that Taiwanese notebook PC manufacturers are shifting an increasing percentage of production to China, encouraged by easier customs clearance procedures and the lower costs.”

Greater Chinese notebook PC manufacturers are seeing profits shrink, because, in addition to ASP falling, vendors are increasingly consigning components when ordering full systems.

However, Chou notes, “One factor that will help to offset Greater Chinese notebook PC makers falling profits is Dell’s move away from the BTO (Build-To-Order) model with its SmartStep 100 series. Although volume is still small at this point in time, Dell’s orders for full systems to be delivered via TDS (Taiwan Direct Shipping) and CDS (China Direct Shipping) presents Greater Chinese notebook PC players with an opportunity to raise profits in the future.”

Another positive sign for Greater Chinese notebook PC manufacturers, in terms of increasing profit margins, is that the percentage of shipments accounted for by own brand models rose to 9.7% in the second quarter of 2002, up from 7.3% in the first quarter of the year. The driving force behind this change was an increase in shipments of desktop solutions notebook PCs, especially ECS’s DeskNote.

Greater China is expected to account for approximately 60% of worldwide notebook PC production in 2002, but a new threat is on the horizon. Korean manufacturers are receiving an increased number of orders, as international vendors seek to diversify their supplier portfolios. In 2002, it is anticipated that Korea will produce 8% of the world’s notebook PCs, and that figure will continue to rise for the foreseeable future.

In the second quarter of 2002, the Greater Chinese notebook PC industry achieved a shipment volume of more than 4.5 million units and shipment value topped US$3.5 billion, growth rates of 35.7% and 17.3% respectively.