Taipei, Friday, October 24, 2014 01:34 (GMT+8)
mostly cloudy
Taipei
22°C
Digitimes Research: Taiwan ODMs losing out as PC brand vendors turn to China supply chain for tablets
Jim Hsiao, DIGITIMES Research, Taipei [Monday 7 April 2014]

Among global top-7 PC brand vendors, only Apple (sixth place) still outsources its tablet orders mainly to Taiwan-based EMS providers and ODMs, while the rest - Lenovo, Hewlett-Packard (HP), Dell, Acer, Asustek Computer and Toshiba - have gradually shifted their entry-level tablet design and manufacturing to China-based makers. Their actions are expected to impact Taiwan-based makers' share in global tablet shipments in 2014.

Lenovo and HP were the earliest vendors that started cooperating with China-based ODMs. In 2013, Lenovo manufactured most of its tablets in house, but the China-based vendor's entry-level A1000 was outsourced to China-based smartphone ODM Shenzhen Huaqin Technology and accounted for almost one third of Lenovo's tablet shipments in the year.

However, because Lenovo's mid-range and high-end Yoga tablets have been enjoying strong demand in 2014, Digitimes Research expects production of these Yoga tablets to occupy the company's in-house capacities for entry-level tablets and force Lenovo to outsource more to China-based ODMs.

In early 2013, through its white-box application processor (AP) partner Rockchip, HP cooperated with China-based ODM BYD for its tablet devices. Although initially BYD had several issues such as a lack of system integration abilities, poor quality of components from upstream partners and unstable shipping schedules, most of the issues have already been improved with supprt from HP and Rockchip. The improvements also have attracted orders from Toshiba.

Although HP has not placed orders with Rockchip in 2014, its partnership with BYD has grown tighter with outsourcing of its new Nvidia and Marvell-based tablets.

On the other hand, starting in the second half of 2013, Intel has treated BYD as an important partner for the tablet market and has been helping it build up its manpower and technology strength. Intel is also offering price cuts for its processors and marketing subsidies to attract brand vendors to use solutions from China players and has successfully attracted Dell and HP to develop Android on x86 tablets.

Dell's new Android tablets for 2014 are expected to adopt Intel processors and be outsourced to BYD for production.

Seeing entry-level tablets' ASP dropping constantly, Taiwan-based brand vendors, which did not consider outsourcing their tablet production to China makers in 2013, started evaluating the option in early 2014 with Acer being the most aggressive. In January, Acer outsourced its 7-inch Iconia One 7 to China-based 3NOD for both the manufacturing and design. Although Acer only placed limited orders and is selling the device mainly in China, the move has shown the vendor the feasibility of outsourcing to China makers. Acer has now also outsourced its new mainstream 7-inch and 7.85-inch tablets to China makers.

After losing its chance to cooperate with Google for next-generation Nexus tablets, Asustek, to make up for losses in shipments to the mid-range and high-end market segments, reportedly may partner with China-based makers to strengthen its competitiveness in the entry-level market.

Samsung Electronics and Lenovo, which mainly manufacture their tablets in house, were expanding their presence in the tablet market during 2013, reducing Taiwan ODMs' combined share in total tablet shipments from over 80% in 2012 to only 66.3%.

Since the top-6 PC brand vendors' shipments account for 17.5% of the global tablet shipments (including the Nexus 7), Taiwan's shipment share may drop below 60% if the vendors give all their entry-level tablet orders to China makers.

Realtime news
  • Taiwan September manufacturing production index down on month, up on year, says MOEA

    Bits + chips | 3h 49min ago

  • Taiflex Scientific, ThinFlex net NT$3.42, NT$1.85 EPS for January-September

    Before Going to Press | 4h 19min ago

  • Digitimes Research: Global LED supply in 2015 may be tight

    Before Going to Press | 5h 5min ago

  • Taiwan market: HTC maintains largest market share by sales volume in September

    Before Going to Press | 5h 7min ago

  • Supply chains still experiencing pressure to reduce panel pricing

    Before Going to Press | 5h 25min ago

  • Foxconn will not acquire TPK, says company

    Before Going to Press | 5h 29min ago

  • Taiwan makers still eyeing sales of Ultra HD TV panels, high-end IT displays

    Before Going to Press | 5h 48min ago

  • Himax Technologies sees booming orders for LCoS solutions

    Before Going to Press | 6h 3min ago

  • Innolux announces acquisition of assets from Hoya Microelectronics

    Before Going to Press | 6h 4min ago

  • Taiwan IC designers expect drops in 3Q14 gross margins

    Before Going to Press | 6h 11min ago

  • Taiwan makers 3-5 years ahead of China in LTPS technology, says AUO

    Before Going to Press | 6h 15min ago

  • Digitimes Research: Taiwan makers developing more technology for second-wave 802.11ac devices

    Before Going to Press | 6h 18min ago

  • Digitimes Research: OLED TV pricing to remain double Ultra HD TV pricing through 2016

    Before Going to Press | 6h 24min ago

  • Sony to launch 12-inch tablet in 1Q15, say Taiwan makers

    Before Going to Press | 6h 27min ago

  • Laibao reaches 80% yields on 5G line; OGS shipments reach 600,000 a month

    Before Going to Press | 6h 28min ago

  • Taiwan makers in China less interested in additional investment, says TEEMA

    Before Going to Press | 6h 34min ago

  • Intel Global Summit 2014 to focus on IoT, smart wearable devices, say Taiwan makers

    Before Going to Press | 6h 42min ago

Pause
 | 
View more
MSI X99S GAMING 9 AC
DIGITIMES Research Tracker Services
DIGITIMES Translation Services
  • 2014 global high brightness LED market, trends and shipment forecast

    For the global LED lighting market, the market size will reach US$25.82 billion in 2014 or a market penetration rate of 23.4%. This is attributable to exponential shipment growth for light bulbs, tubes, and directional lamps.

  • Greater China touch panel shipment forecast through 2015

    This Special Report provides forecasts through 2015 for Greater China touch panel shipments with breakdowns based on technology (glass, film, resistive), application (smartphone, NB and tablet) and by firm.

  • 2014 global tablet demand forecast

    This report analyzes the main players, their strategies and shipments forecasts for 2014, as well as other factors contributing to either growth or decline in various segments within the tablet market, with a particular focus on Apple, Google, Samsung, and Microsoft, along with whitebox vendors.