- Owing to the war in Iraq and the global economic downturn, enterprise IT spending continued to be conservative in the first quarter of 2003. However, shipment volumes for motherboards, desktop and notebook PCs, and severs, which constitute the four primary computing products shipped by Taiwanese makers, have all seen year-on-year growth.
Such high growth rates are largely due to the rising share of outsourcing from international vendors and also to comparatively low volumes shipped during the first quarter of 2002. In particular, notebook PCs and servers reached record highs in shipment volume during the first quarter of 2003. Shipment value of these computing products, excluding motherboards, has also risen despite ongoing price competition due to strong growth in volume. Replacement demand for equipment procured prior to Y2K is expected to form the basis of further growth for Taiwanese computing products in 2003.
Taiwanese motherboard shipment volume saw year-on-year growth of 7.2% in the first quarter of 2003 to reach 23.2 million units. International brand-name vendors continued to place orders with Taiwanese makers while shipments were expedited in response to the looming war in Iraq.
Total shipment value of Taiwanese motherboards in the first quarter of 2003 decreased 3.5% compared with the first quarter of 2002 to US$1.4 billion. ASP also fell 4.7% from US$63.8 in the fourth quarter of 2002 to US$60.8 in the first quarter of 2003. This decline was mainly due to price undercutting by Taiwanese first tier manufacturers in a bid to secure contracts.
Taiwanese notebook PC shipment volume experienced year-on-year growth of 23% in the first quarter of 2003 to reach 5.1 million units, up from 4.2 million in the first quarter of 2002 as brand-name vendors launched value-line models to expand market share. Additionally, increased demand resultant from the rollout of new models with the Intel Centrino platform or built with displays 15-inches or larger further drove volume growth.
Shipment value of Taiwanese notebook PC makers rose to US$3.6 billion in the first quarter of 2003 from US$3.4 billion in the first quarter of 2002 for 6% year-on-year growth. However, notebook PC ASP continued to slide, dropping from US$710 in the fourth quarter of 2002 to US$690 in the first quarter of 2003. Still, this fall constituted only a 3% decrease in ASP as the launch of new models served to slow price declines.
Taiwanese desktop PC shipment volume posted year-on-year growth of 11.4% in the first quarter of 2003, reaching 6.2 million units. Worldwide PC demand in the first quarter of 2003 picked up considerably compared to the same period in 2002. Combined with the rising number of orders from international vendors, low shipment volume and value in the first quarter of 2002 enabled nearly double-digit year-on-year increases. Such substantial growth in desktop PCs has become a rarity in recent years.
Taiwanese desktop PC shipment value reached US$1.7 billion in the first quarter of 2003 for year-on-year growth of 9.9%. However, ASP fell 3% from US$286 in the fourth quarter of 2002 to US$277 as the drop in full system shipments outpaced the decline of barebone.
Taiwanese server shipment volume posted 13.4% year-on-year growth to reach a record high 415,000 units in the first quarter of 2003. This new high in shipment volume surpassed the previous record of 407,000 units in the fourth quarter of 2002. This growth was due primarily to the continuous increase in orders from international server vendors to Taiwanese manufacturers.
Taiwanese server shipment volume reached US$361 million in the first quarter of 2003 for 8.7% year-on-year growth. A rising share of full system and 2-way server shipments served to slow the decline of ASP, which fell slightly from US$872 in the fourth quarter of 2002 to US$870 in the first quarter of 2003.
Although the Iraq conflict is winding down, the spread of SARS from Southern China throughout the globe has presented a new challenge to the worldwide market. Traditional markets are faced with changing consumer behavior as shoppers avoid stores following the outbreak of SARS. Thus, business opportunities stemming from the reconstruction of Iraq are likely to be tempered by the negative economic impact of SARS in the short term. However, opportunities are expected to arise from SARS as consumers and enterprises turn to information technology in order to avoid person-to-person contact, which is anticipated to compensate for the lack of demand brought on by the outbreak.
A number of PC component developments are also likely to stimulate overall demand. Intel is strengthening collaborative efforts with Taiwanese chipset makers on the 800MHz FSB. Also, the rollout of 3.2GHz desktop processors is driving high-end, high-performance chips into the mainstream market. Prices for the Centrino are continuing to drop, and the platform is being bundled with 802.11a+b solutions. Additionally, large-scale shipments of motherboards with 865 and 875 chipsets are starting, while AMD is expected to drastically reduce prices for its desktop PC processor at the end of April. Thus, despite the advent of the traditionally slow second quarter, declines in the second quarter of 2003 are not anticipated to see a sharp drop in comparison to previous years.