Abstract

Taiwanese digital camera makers are mainly involved in ODM/OEM production; branded manufacturing' share of the industry's total shipment volume has fallen to less than 10%. The volume of contracts secured from leading international camera vendors is thus one of the most important factors affecting the industry's development. Currently, Japanese vendors account for approximately 75% to 80% of all digital cameras sold worldwide, but only a few of these vendors outsource part of their production to Taiwan.

The two leading vendors, Sony and Canon, continue to produce all their digital cameras in-house, effectively denying the Taiwanese makers access to 35% of the digital camera market. Recently, both Sony and Canon have enjoyed superior sales performances, and their market share continues to rise. This further strengthening of the top two vendors' position will inevitably affect the development of the Taiwanese digital camera market.

Other Japanese vendors including Olympus, Fujifilm, Nikon, Casio, Panasonic, Konica Minolta, Pentax, Kyocera, and Ricoh now combine in-house production with outsourcing. These are the customers whose contracts Taiwanese makers fight to secure. Olympus, Fujifilm, Casio, Pentax, Kyocera, and Ricoh are already outsourcing the production of some models to Taiwanese manufacturers, while Taiwanese makers are currently negotiating with several other vendors. The US vendors Kodak and HP, and Korea's Samsung, have long relied on the Taiwanese makers to manufacture their cameras; it is anticipated that the collaborative relationships with these vendors will continue. Today, however, Taiwanese ODM/OEM manufacturers have to face competition not only within Taiwan, but also from ODM/OEM providers in other countries. Sanyo, the world's largest ODM/OEM manufacturer of digital cameras, is already collaborating with several Japanese camera vendors, and has recently began manufacturing cameras for HP. Sanyo enjoys an advantage over the Taiwanese makers in terms of access to key components, scale of production, technology, and customer relationships. Sanyo is thus the Taiwanese digital camera makers' number one competitor. Japan's Funai Electric, which manufactures ultra-low-priced VHS (Video Home System) recorders, DVD players and ink-jet printers in China, is also moving aggressively into the digital camera OEM business. Faced with a competitor like Funai that is highly skilled in low-cost, large-volume manufacturing, it remains to be seen whether the Taiwanese makers will be able to retain their cost advantage.

With the dramatic price fall of digital cameras in the last few years, some brand-name vendors have found their revenue and profitability performance disappointing, despite of their growth in shipment volume. Lackluster performance by the brand-name vendors would lead to inventory pressures, and bring a further downward revision of the Taiwanese makers' shipment forecasts. In the second half of 2004, given the steady supply of components, the two key indicators for the Taiwanese digital camera industry's performance will be end-market demand that accords with prevalent expectations and the sales performance of the brand-name vendors on which the Taiwanese makers rely for contracts.

Appendix

Research Scope

The Taiwanese digital camera industry encompasses digital cameras produced by Taiwanese makers anywhere in the world. Digital cameras referred to in this report are cameras used mainly to take still pictures, which have an independent power supply and independent digital storage medium. Digital video camcorders, camera modules for mobile phone handsets and PDAs, and single-function, rather than dual mode, PC cameras do not fall within the scope of this research.

Definitions

Shipment Destinations

Shipment destinations for ODM/OEM business are based on the OEM's country of origin.

Glossary of Terms