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The Greater Chinese Notebook PC Industry, 1H 2002 and Beyond

July 25, 2002 / Wen-tang Chen / Charles Chou

48 Page, Statistics Report

US$1,680 (Single User License)

Abstract

Despite less than ideal market conditions in Western Europe and North America in the second quarter of 2002, the Greater Chinese notebook PC industry posted 35% year-on-year growth in shipment volume and a 17% increase in shipment value. The average selling price of notebook PCs continued to plummet as Greater Chinese manufacturers further dropped prices and brand-name makers adjusted their component purchasing strategies to cut overall costs. Along with the implementation of more streamlined customs procedures, the second quarter also saw increasing concentration of production in China following the completion production facilities there; increased shipments of value-line products from that country further contributed to lower average selling price. The sustained growth of desktop solutions notebook PCs also sparked a rebound in own-brand shipments as Greater Chinese makers seek to penetrate the Chinese market. In OEM business, desktop solutions notebook PC production and a change in the structure of orders led to some significant changes in industry rankings, with Compal taking over the top spot from Quanta. In addition to a review of the Greater Chinese notebook PC industry in the first half of 2002, this report will examine the future movements of Japanese and Korean makers, as well as discuss the impact of intensifying price competition on the future of the Greater Chinese notebook PC industry.

List of Topics
Shipment Volume and Value, Industry Concentration, ASP, Form Factor, Major Greater Chinese Notebook PC Makers Analysis, Price Structure, Business Types, Shipment Destinations, Product Architecture, Displays, Taiwanese Notebook PC Manufacturers' Operations in China, Worldwide Production Share, Japanese Makers, Korean Makers, Third Quarter Forecast, Second Half of 2002 Forecast, Forecast for 2003 and Beyond

List of Figures
Figure 1 The Greater Chinese Notebook PC Industry's Shipment Volume, Shipment Value, and ASP 1Q 2000 - 2Q 2002

Figure 2 The Greater Chinese Notebook PC Industry's Shipment Volume by Tier, 1Q 2001 - 2Q 2002

Figure 3 The Greater Chinese Notebook PC Industry's Shipment Value by Tier, 1Q 2001 - 2Q 2002

Figure 4 The Greater Chinese Notebook PC Industry's ASP by Tier, 1Q 2001 - 2Q 2002

Figure 5 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Value, 2001 - 2Q 2002

Figure 6 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Volume by Tier, 2001 - 2Q 2002

Figure 7 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Volume Share by Tier, 2001 - 2Q 2002

Figure 8 The Greater Chinese Notebook PC Industry's Shipment Price Points, 1Q 2001 - 2Q 2002

Figure 9 The Greater Chinese Notebook PC Industry's Shipment Share by Price Points, 1Q 2001 - 2Q 2002

Figure 10 The Greater Chinese Notebook PC Industry's First Tier Makers' Shipment Price Points, 1Q 2001 - 2Q 2002

Figure 11 The Greater Chinese Notebook PC Industry's First Tier Makers' Shipment Share by Price Points, 1Q 2001 - 2Q 2002

Figure 12 The Greater Chinese Notebook PC Industry's Second Tier Makers' Shipment Price Points, 1Q 2001 - 2Q 2002

Figure 13 The Greater Chinese Notebook PC Industry's Second Tier Makers' Shipment Share by Price Points, 1Q 2001 ?2Q 2002

Figure 14 The Greater Chinese Notebook PC Industry's Shipment Volume by Business Type, 1Q 2001 - 2Q 2002

Figure 15 The Greater Chinese Notebook PC Industry's First-Tier Makers' Shipment Volume by Business Type, 1Q 2001 - 2Q 2002

Figure 16 The Greater Chinese Notebook PC Industry's Second Tier Makers' Shipment Volume by Business Type, 1Q 2001-1Q 2002

Figure 17 The Greater Chinese Notebook PC Industry's Shipment Volume by Destination Area, 1Q 2001 - 2Q 2002

Figure 18 The Greater Chinese Notebook PC Industry's Shipment Share by Destination Area, 1Q 2001 - 2Q 2002

Figure 19 The Greater Chinese Notebook PC Industry's First Tier Makers' Shipment Volume by Destination Area, 1Q 2001 - 2Q 2002

Figure 20 The Greater Chinese Notebook PC Industry's First Tier Makers' Shipment Share by Destination Area, 1Q 2001 - 2Q 2002

Figure 21 The Greater Chinese Notebook PC Industry's Second Tier Makers' Shipment Volume by Destination Area, 1Q 2001 - 2Q 2002

Figure 22 The Greater Chinese Notebook PC Industry's Second Tier Makers' Shipment Share by Destination Area, 1Q 2001 - 2Q 2002

Figure 23 The Greater Chinese Notebook PC Industry's Product Mix, 1Q 2001 - 2Q 2002

Figure 24 The Greater Chinese Notebook PC Industry's Product Mix Percentage, 1Q 2001 -2Q 2002

Figure 25 The Greater Chinese Notebook PC Industry's First Tier Makers' Product Mix, 1Q 2001 - 2Q 2002

Figure 26 The Greater Chinese Notebook PC Industry's First Tier Makers' Product Mix Percentage, 1Q 2001 - 2Q 2002

Figure 27 The Greater Chinese Notebook PC Industry's Second Tier Makers' Product Mix, 1Q 2001 - 2Q 2002

Figure 28 The Greater Chinese Notebook PC Industry's Second Tier Makers' Product Mix Percentage, 1Q 2001 - 2Q 2002

Figure 29 The Greater Chinese Notebook PC Industry's Displays by Screen Size, 1Q 2001 -2Q 2002

Figure 30 The Greater Chinese Notebook PC Industry's Screen Size Ratios, 1Q 2001 - 2Q 2002

Figure 31 The Greater Chinese Notebook PC Industry's First Tier Makers' Displays by Screen Size, 1Q 2001 - 2Q 2002

Figure 32 The Greater Chinese Notebook PC Industry's First Tier Makers' Screen Size Ratios, 1Q 2001 - 2Q 2002

Figure 33 The Greater Chinese Notebook PC Industry's Second Tier Makers' Displays by Screen Size, 1Q 2001 - 2Q 2002

Figure 34 The Greater Chinese Notebook PC Industry's Second Tier Makers' Screen Size Ratios, 1Q 2001 - 2Q 2002

Figure 35 The Greater Chinese Notebook PC Industry's Shipment Volume by Production Site, 2001 - 2Q 2002

Figure 36 The Worldwide Notebook PC Industry's Production Share by Area, 2000 - 2003

Figure 37 The Greater Chinese Notebook PC Industry's Shipment Volume, Shipment Value, and ASP, 1Q 2001 -4Q 2002

Figure 38 The Greater Chinese Notebook PC Industry's Shipment Volume, Shipment Value, and ASP, 2001 - 2006

List of Tables
Table 1 Major Greater Chinese Notebook PC Manufacturer Ranking by Tier, 2001- 2Q 2002

Orders from North America and Western Europe account for a much higher share of Greater Chinese notebook PC production than orders from Japan; previously, 100% of outsourcing from HP and Apple was given to Greater Chinese makers. If North American and Western European vendors are unable to maintain steady sales growth, the number of orders going to Greater Chinese manufacturers will be unable to go beyond its current level. Given the smaller percentage of outsourcing given to Taiwanese makers by Japanese vendors, orders from this country will provide growth opportunities for the Greater Chinese notebook PC industry in the future.

If Japanese makers decide to expand production sites in China, during such a period of transition, Japanese makers will execute test runs with small-scale orders from Taiwanese manufacturers. Finally, Japanese makers will only produce one spindle models in Japan, as well as undertake final assembly, for the domestic market. For Taiwanese manufacturers seeking orders from Japanese makers, competition with factories built by Japanese manufacturers in China will restrict future growth.

Leading international notebook PC vendors will gradually start to release more orders to Korean notebook PC makers. Greater Chinese manufacturers currently account for approximately 60% of the world's notebook PC production, and vendors will start outsourcing to Korean companies in order to diversify their supplier portfolios and thereby reduce the risks inherent on depending heavily on a small number of suppliers.

Furthermore As the production capability of Korean fifth-generation LCD panel plants is growing faster than plants in Taiwan, Korean makers will have a higher degree of control over LCD panel prices. The resultant prices that can be offered to customers will improve their notebook PC businesses. In the long run, the manufacture of notebook PCs will come to be dominated by Korean and Greater Chinese makers.

As product differentiation between notebook PCs melts away, pricing is progressively becoming the key competitive factor. Recently, notebook PC manufacturers have drastically cut prices to win orders from the new HP, and although this method will serve to shrink manufacturers' profit margins, it is an unavoidable reality for makers hoping to gain HP's attention.

With superior economies of scale, large notebook PC manufactures such as Quanta and Compal have greater flexibility in price negotiation, which will aid these makers in staying farther ahead of the competition. However, given the large scale of production that can be won from HP, the resultant competition has engendered negotiated prices that are rather out of the ordinary. Similarly, Inventec and Arima, which have been heavily reliant on Compaq for so long, will undoubtedly see a considerable drop in production if the new HP decides not to outsource to them. These two companies have thus been forced to make concessions in pricing. As for other makers that have not fostered a manufacturing relationship with the new HP, price will be the best way to attract orders from this giant.

List of Companies

Acer	宏碁
Alphatop	致勝
AMD (Advanced Micro Device
Apple
Arima	華宇
ASUS	華碩
Clevo	藍天電腦
Best Buy
Compal	仁寶
Compaq
Dell	戴爾
Dogong	達功
ECS (Elitegroup Computer Systems)	精英
FIC (First International Computer)	大眾
Foxconn	鴻海
Fujitsu-Siemens
Hitachi
HP	惠普
IBM (International Business Machine)
Intel
Inventec	英業達
Inventec	英業達
Legend	聯想
Mitac International	神達
Mitac Technology	神基
NEC
Quanta	廣達
Sony
Sotec
Tech-Front (Shanghai) Computer Co., Ltd.	達豐
Toshiba
Twinhead	倫飛
Uniwill	志合
Wistron	緯創

List of Industrial Zones

Kunshan Industrial Park Export Processing Zone	昆山出口加工區
Shanghai Caohejing Hi-Tech Park	上海漕河涇開發區
Shanghai Songjiang Export Processing Zone	上海松江加工出口區
Singapore Industrial Park	新加坡園區
Suzhou New District	蘇州新區

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