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The Greater Chinese Notebook PC Industry, 1Q 2003 and Beyond

June 10, 2003 / Charles Chou

45 Page, Statistics Report

US$1,890 (Single User License)

Abstract

Although the first quarter is traditionally a slow season for notebook PC shipments, the first quarter of 2003 proved to be an exception. With brand-name vendors aggressively pushing sales and building up inventories, the Greater Chinese notebook PC industry actually witnessed slight sequential growth from the fourth quarter of 2002, edging up to record 5.1 million units. Two-spindle models and notebook PCs equipped with 15-inch displays comprised the bulk of the thrust in volume growth, as such models replace all-in-one and 14-inch display notebook PCs as the mainstream. Although China has seen the heaviest impact from SARS, the share of Greater Chinese notebook PCs produced in China continues to mount. However, with Japanese and Korean players steadily completing production sites in China, the competitive advantages that Greater Chinese makers derive from China-based production are gradually fading. The rollout of Intel's Centrino platform in March 2003 has attracted numerous players, and a substantial June 2003 price cut is expected to boost the penetration of Centrino-equipped notebook PCs. As low priced Centrino models hurtle near, an increase in demand is likely; however, such pricing will take its toll on revenues and profit margins.

List of Topics
Shipment volume forecast up to 1Q 2004, special analyses covering tablet PCs, the future impact of the Centrino platform, and the diminishing advantages of China-based production. First quarter 2003 review and tier cluster breakdowns of shipment volume, value, ASP, product architecture including spindle types and display sizes, price structure, business types, shipment destinations. Analysis of production locations including coverage of China-based activities. Also includes major manufacturer profiles.

Acer, Alphatop, Amtek, Apple, Arima, Asus, Clevo, Compal, Dell, ECS, eMachines, Epson, FIC, Fujitsu, Gericom, Hitachi, HP, IBM, Intel, Inventec, LG,Medion, Mitac, MSI, NEC, Quanta, Samsung, Sharp, Sony, TCL, Toshiba, Trigem, Twinhead, Uniwill, Wistron

List of Figures
Figure 1 The Greater Chinese Notebook PC Industry's Shipment Volume, Shipment Value, and ASP 1Q 2001 - 1Q 2003

Figure 2 The Greater Chinese Notebook PC Industry's Shipment Volume by Tier, 1Q 2001 - 1Q 2003

Figure 3 The Greater Chinese Notebook PC Industry's Shipment Value by Tier, 1Q 2001 - 1Q 2003

Figure 4 The Greater Chinese Notebook PC Industry's ASP by Tier, 1Q 2001 - 1Q 2003

Figure 5 The Greater Chinese Notebook PC Industry's Shipment Price Points, 1Q 2001 - 1Q 2003

Figure 6 The Greater Chinese Notebook PC Industry's Shipment Share by Price Points, 1Q 2001 - 1Q 2003

Figure 7 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Price Points, 1Q 2001 - 1Q 2003

Figure 8 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Share by Price Points, 1Q 2001 - 1Q 2003

Figure 9 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Price Points, 1Q 2001 - 1Q 2003

Figure 10 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Share by Price Points, 1Q 2001 - 1Q 2003

Figure 11 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Value, 1Q 2002 - 1Q 2003

Figure 12 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Volume by Tier, 1Q 2002 - 1Q 2003

Figure 13 The Greater Chinese Notebook PC Industry's Full System and Barebone Shipment Volume Share by Tier, 1Q 2002 - 1Q 2003

Figure 14 The Greater Chinese Notebook PC Industry's Shipment Volume by Business Type, 1Q 2001 - 1Q 2003

Figure 15 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Volume by Business Type, 1Q 2001 - 1Q 2003

Figure 16 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Volume by Business Type, 1Q 2001 - 1Q 2003

Figure 17 The Greater Chinese Notebook PC Industry's Shipment Volume by Destination Area, 1Q 2001 - 1Q 2003

Figure 18 The Greater Chinese Notebook PC Industry's Shipment Share by Destination Area, 1Q 2001 - 1Q 2003

Figure 19 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Volume by Destination Area, 1Q 2001 - 1Q 2003

Figure 20 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Shipment Share by Destination Area, 1Q 2001 - 1Q 2003

Figure 21 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Volume by Destination Area, 1Q 2001 - 1Q 2003

Figure 22 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Shipment Share by Destination Area, 1Q 2001 - 1Q 2003

Figure 23 The Greater Chinese Notebook PC Industry's Product Mix, 1Q 2001 - 1Q 2003

Figure 24 The Greater Chinese Notebook PC Industry's Product Mix Percentage, 1Q 2001 -1Q 2003

Figure 25 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Product Mix, 1Q 2001 - 1Q 2003

Figure 26 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Product Mix Percentage, 1Q 2001 - 1Q 2003

Figure 27 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Product Mix, 1Q 2001 - 1Q 2003

Figure 28 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Product Mix Percentage, 1Q 2001 - 1Q 2003

Figure 29 The Greater Chinese Notebook PC Industry's Displays by Screen Size, 1Q 2001 - 1Q 2003

Figure 30 The Greater Chinese Notebook PC Industry's Screen Size Ratios, 1Q 2001 - 1Q 2003

Figure 31 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Displays by Screen Size, 1Q 2001 - 1Q 2003

Figure 32 The Greater Chinese Notebook PC Industry's First and Second Tier Makers' Screen Size Ratios, 1Q 2001 - 1Q 2003

Figure 33 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Displays by Screen Size, 1Q 2001 - 1Q 2003

Figure 34 The Greater Chinese Notebook PC Industry's Third Tier and Other Makers' Screen Size Ratios, 1Q 2001 - 1Q 2003

Figure 35 The Greater Chinese Notebook PC Industry's Shipment Volume by Production Site, 1Q 2002 - 1Q 2003

Figure 36 The Greater Chinese Notebook PC Industry's Shipment Volume, Shipment Value, and ASP, 1Q 2002 - 1Q 2004

List of Tables
Table 1 Major Greater Chinese Notebook PC Manufacturer Ranking by Tier, 1Q 2002 - 1Q 2003

Tablet PCs Attracting More Notebook PC Players

By crossing into the Tablet PC segment, notebook PC makers can further expand and strengthen their relationships with customers, enjoying the synergies derived from the similarities between the two products. Additionally, the notebook PC industry has already become fairly mature, and contract manufacturing does not allow much profit margin, which is holding at only 6% to 8%. By contrast, profit margins on Tablet PCs range between 15% and 25%; thus, if maker are able to seize the opportunity to develop tablet PCs, future competitiveness will be enhanced either by increased revenues and profit margins or upgraded technological capabilities.

Advantages of China-Based Production Diminishing

Moving notebook PC production to China has provided Greater Chinese manufacturers with a certain degree of cost savings, as well as honed a stronger edge with which to compete with Japanese and Korean makers. However, despite the savings gleaned from cheaper labor and land, cost savings derived from components is limited. As more production sites in China successively come on-line, excess capacity is becoming increasingly serious, motivating Taiwanese notebook PC makers to underbid one another for contracts. Simultaneously, Japanese Korean players such as Toshiba, Samsung, and LG will begin mass production in China during 2003. Over the short term these vendors will face cultural obstacles and issues in transferring to a different supply chain. However, in the long term, Taiwanese, Japanese, and Korean players, drawing off the same labor resources and supply chain, will be sharing very similar cost structures, gradually canceling out Greater Chinese notebook PC makers' cost advantages.

Falling Centrino Prices

Although Centrino notebook PC retail prices remain stubbornly high, some vendors have implemented aggressive promotions, dropping prices to mainstream P4-M model levels in order to stimulate consumer receptivity. However, despite the increase in sales volume these price cuts are expected to engender, manufacturers will be unable turn back the slide in ASP as greater output does little to bring about a commensurate increase in revenues and profits. Whether these low prices turn out to be remedy or poison will be determined by makers' careful responses.

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