Abstract

Innovative Applications to Drive Market Demand

Although technology development would improve product performance, its influence on driving market demand has reduced significantly. Market growth has mainly come from innovations in applications, such as the introduction of WLAN for notebook PCs by Intel in 2003, which provided wireless Internet access capabilities and stimulated market growth.

Technologically, camera modules can be said to be an innovation in communication methods. In the past, users mainly rely on instant messaging software like MSN Messenger and Skype to communicate with each others. As Notebook PC performance, Internet environment, and software applications gradually mature, the notebook PC camera module market will see dramatic growth.

Enterprise Segment to become Main Growth Force

Growth in the notebook PC camera module market is currently coming from consumer model PCs. With the continuous promotion of global brands and strong support from the Taiwanese camera module supply chain, the entire notebook PC camera module market is expected to remain rapid growth in 2007.

However, the notebook PC camera module market is likely to encounter growth bottleneck in the future, since consumer notebook PCs only have a 40% market share. Therefore, the key factor in market growth will largely hinge on the penetration of camera modules used in enterprise notebook PCs, such as HP's NC/NX series, Dell's Latitude series, and Lenovo's Thinkpad T and X series.

In addition to communication and image capture functions emphasized in consumer models, ODMs, module manufacturers, and IC suppliers are working on new applications and technologies that will appeal to enterprise users. For example, face recognition technology is being developed for use in notebook PC security. These new applications and technologies are projected to stimulate use of camera modules in enterprise notebook PCs.

Intensified Competition from Participation of ODMs

Low entry barrier have attracted many players to join the notebook PC camera module fray. With rapid market growth, notebook PC profit margins have been declining. Therefore a number of notebook PCs ODMs are expanding into the camera module market. They have tried to increase profit margins through vertical integration. Faced with intensified competition, existing players will have to strengthen their core competitiveness and develop new technologies and applications for product differentiation, such as backend image processing. Cooperation with IC design houses is also an option for existing players to achieve success in this market.

Appendix

List of Companies