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The Greater Chinese Notebook PC Industry, 1Q 2004 and Beyond

June 07, 2004 / Helen Chiang

42 Page, Statistics Report

US$2,150 (Single User License)

Abstract

Due to seasonal effects and lower-than-expected demand, Greater Chinese notebook PC shipment volume totaled approximately 6.8 million units, suffering a 16.3% drop sequentially in the first quarter of 2004. Desktop PC replacement, previously expected to fuel growth in the first quarter, failed to materialize. Coupled with weak demand in the consumer market, the first quarter of 2004 chalked up a lackluster performance. In the second quarter volume is forecasted to receive a lift as vendors are expected to have resolved inventory pile-ups, while new chips and new chip naming strategies stimulate demand.

List of Topics
Quarterly shipment volume and value forecast up to 1Q 2005. Special analyses covering the consumer market, inventory problems, and desktop PC replacement in the first quarter of 2004. The first quarter 2004 review and tier cluster breakdowns of shipment volume, shipment volume by assembly level, shipment value, ASP, product architecture including spindle types and display sizes; price structure, business types, shipment destinations, and production sites with coverage of individual makers' China-based activities. Also includes major manufacturer ranking and industry concentration analysis.

Acer, Amoi Electronics, Apple, Arima, ASUS, Clevo, Compal, Dell, ECS, eMachines, FIC, HP, IBM, Intel, Inventec, LG, Mitac, NEC, Quanta, Samsung, Sony, Toshiba, Twinhead, Uniwill, Wistron

List of Figures
Figure 1 The Greater Chinese Notebook PC Industry's Shipment Volume, Shipment Value, and ASP 1Q 2002 - 1Q 2004

Figure 2 The Greater Chinese Notebook PC Industry's Shipment Volume by Tier, 1Q 2002 - 1Q 2004

Figure 3 The Greater Chinese Notebook PC Industry's Shipment Value by Tier, 1Q 2002 - 1Q 2004

Figure 4 The Greater Chinese Notebook PC Industry's ASP by Tier, 1Q 2002 - 1Q 2004

Figure 5 The Greater Chinese Notebook PC Industry's Shipment Price Points, 1Q 2002 - 1Q 2004

Figure 6 The Greater Chinese Notebook PC Industry's Shipment Share by Price Points, 1Q 2002 - 1Q 2004

Figure 7 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Price Points, 1Q 2002 - 4Q 2003

Figure 8 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Share by Price Points, 1Q 2002 - 1Q 2004

Figure 9 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Price Points, 1Q 2002 - 1Q 2004

Figure 10 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Share by Price Points, 1Q 2002 - 1Q 2004

Figure 11 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Volume, 1Q 2002 - 1Q 2004

Figure 12 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Volume by Tier, 1Q 2002 - 1Q 2004

Figure 13 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Volume Share by Tier, 1Q 2002 - 1Q 2004

Figure 14 The Greater Chinese Notebook PC Industry's Shipment Volume by Business Type, 1Q 2002 - 1Q 2004

Figure 15 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Volume by Business Type, 1Q 2002 - 1Q 2004

Figure 16 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Volume by Business Type, 1Q 2002 - 1Q 2004

Figure 17 The Greater Chinese Notebook PC Industry's Shipment Volume by Destination Area, 1Q 2002 - 1Q 2004

Figure 18 The Greater Chinese Notebook PC Industry's Shipment Share by Destination Area, 1Q 2002 - 1Q 2004

Figure 19 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Volume by Destination Area, 1Q 2002 - 1Q 2004

Figure 20 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Share by Destination Area, 1Q 2002 - 1Q 2004

Figure 21 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Volume by Destination Area, 1Q 2002 - 1Q 2004

Figure 22 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Share by Destination Area, 1Q 2002 - 1Q 2004

Figure 23 The Greater Chinese Notebook PC Industry's Shipments by Spindle, 1Q 2002 - 1Q 2004

Figure 24 The Greater Chinese Notebook PC Industry's Shipment Share by Spindle, 1Q 2002 - 1Q 2004

Figure 25 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipments by Spindle, 1Q 2002 - 1Q 2004

Figure 26 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Product Mix Percentage, 1Q 2002 - 1Q 2004

Figure 27 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipments by Spindle, 1Q 2002 - 1Q 2004

Figure 28 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Share by Spindle, 1Q 2002 - 1Q 2004

Figure 29 The Greater Chinese Notebook PC Industry's Displays by Screen Size, 1Q 2002 - 1Q 2004

Figure 30 The Greater Chinese Notebook PC Industry's Screen Size Ratios, 1Q 2002 - 1Q 2004

Figure 31 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Displays by Screen Size, 1Q 2002 - 1Q 2004

Figure 32 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Screen Size Ratios, 1Q 2002 - 1Q 2004

Figure 33 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Displays by Screen Size, 1Q 2002 - 1Q 2004

Figure 34 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Screen Size Ratios, 1Q 2002 - 1Q 2004

Figure 35 The Greater Chinese Notebook PC Industry's Shipment Volume by Production Site, 1Q 2002 - 1Q 2004

Figure 36 The Greater Chinese Notebook PC Industry's Shipment Volume, 1Q 2003 - 1Q 2005

List of Tables
Table 1 Major Greater Chinese Notebook PC Manufacturer Ranking by Tier, 1Q 2002 - 1Q 2004

Inventory Problems Haunt Market

Due to the explosive growth in the notebook PC market in the fourth quarter of 2003, major vendors such as HP optimistically began stocking up for the first quarter. However, lower-than-expected demand resulted in massive inventory pile-ups, further impacting contract makers' shipments. The Greater Chinese notebook PC industry was therefore dealt a blow in the first quarter of 2004.

With market demand heating up in the second quarter, inventory problems are expected to be relieved. Additionally, to clear off inventory pile-ups and avoid the associated cost burden, brand-name vendors are expected to further drive down prices. This move is likely to squeeze orders and profits of contract makers and affect their partnership with vendors. A case in point: LG has suffered an order exodus due to lack of cost advantages.

Desktop Replacement Determines Growth Momentum

Over the last two years, the notebook PC market has registered an increased demand for models with multi-media functionality. Unit prices of notebook PC in the end market have seen a downward spiral, nearly on par with desktop PC. Therefore, desktop PC replacement was previously expected to stoke market growth in 2004. However, such effects have not yet surfaced in the first quarter, as indicated by the shipment performance. As the first quarter is traditionally a slow retail season and not a major development period in the consumer market, the magnitude of replacement effects remains to be seen. Nevertheless, if they do not kick in until the end of the third quarter, market momentum is expected to be undermined.

Appendix

Research Scope

The "Greater Chinese Notebook PC Industry" refers to an industry dominated by Taiwanese notebook PC makers that manufacture in China and the Philippines. At the present time, back-end final assembly operations set up by major notebook PC vendors such as Toshiba, Sony, Dell, and IBM, or the small-scale production of Chinese makers, are not considered to be within the scope of this definition.

Definitions

Assembly Level

Full Systems

A full system is a finished notebook PC ready for use at time of shipment.

Barebone

Barebone systems range from motherboards that have been assembled with any other piece of notebook PC equipment, such as a case, to a product that contains all but one element of a full system, such as a CPU (Central Processing Unit).

Product Architecture

One-Spindle

A notebook PC that only includes an internal hard disk drive. Optical disk and floppy disk drives are attached as peripherals.

Two-Spindle

A notebook PC that only includes an internal hard disk drive and an optical disk drive. A swappable bay for a floppy disk or second optical disk drive may be provided.

All-In-One

A notebook PC with at least one internal hard disk drive, one internal floppy disk drive, and one internal optical disk drive. Alternatively, an all-in-one machine can contain two optical disk drives and no floppy disk drive. Additional disk drives may also be attached.

Desktop Solutions Notebook PC

A notebook PC manufactured with a desktop CPU and other desktop components.

DeskNote

A type of desktop solution notebook PC that is similar to an LCD PC. However, a DeskNote more closely resembles a notebook PC physically because it has a foldable case that fully protects the LCD display, and is highly portable. A DeskNote also uses desktop PC components, but does not have a built-in battery.

Business Types

OEM

The OEM business model entails carrying out product manufacturing or assembly according to specifications supplied by the customer. The OEM business model emphasizes production efficiency; thus, in order to lower costs, customers outsource manufacturing to OEM providers. This cooperation forms a division of labor among design, manufacturing, and sales.

ODM

The ODM business model entails undertaking product design and manufacturing, but not direct retail sales or brand promotion. ODM providers either collaborate with customers on product specifications or independently design products according to customer specifications; the ODM provider then receives manufacturing orders upon customer approval. The ODM model links the sales capabilities of the ODM customer and the design and manufacturing capabilities of the ODM provider, developing a cooperative division of labor throughout the product's value chain.

EMS

EMS providers focus on the manufacturing and after-sales service end of the value chain; some providers also offer design services. EMS is alternatively called CEM (Contract Electronics Manufacturing); however, the CEM business model mainly focuses on the manufacture of subassemblies, rather than the production of complete products or logistics.

Glossary of Terms

CEM		Contract Electronics Manufacturing
CPU		Central Processing Unit
DRAM		Dynamic Random-Access Memory
EMS		Electronics Manufacturing Service
LCD		Liquid Crystal Display
ODM		Original Design Manufacturer
OEM		Original Equipment Manufacturer
PCB		Printed Circuit Board
USB		Universal Serial Bus
WAPI		Wireless Authentication and Privacy Infrastructure

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