Data report
Global tablet market – 3Q 2018
Summer Kuo, DIGITIMES Research, Taipei
According to Digitimes Research statistics, global tablet shipments totaled 44.89 million units in third-quarter 2018, up 21.1% on quarter and 6.1% on year thanks to high season effects.
Table of contents

Introduction

According to Digitimes Research statistics, global tablet shipments totaled 44.89 million units in third-quarter 2018, up 21.1% on quarter and 6.1% on year thanks to high season effects. Among them, brand tablet shipments soared 29.9% sequentially while white-box tablet shipments saw flat growth from the prior quarter.

In terms of size, the share of 7.x-inch products of third-quarter 2018 tablet shipments stayed around 15% with 10-inch products gradually becoming the mainstream. This is because the second half is a high season for Amazon, which focuses on 7-inch and 8-inch tablets. Although 10.x-inch products will only account for a smaller than 30% share in the third and fourth quarter, their share will break through the 40% mark in first-quarter 2019 with Amazon's shipments on the wane.

Furthermore, beginning early 2018, Apple is attempting to penetrate into the primary and secondary education markets by offering iPad (2018) with support for Apple Pencil. However, Google soon followed by launching Chromebook Tab with a Wacom EMR pen as a standard accessory, allowing Chrome OS to gain a share of the tablet market. Digitimes Research thinks although Acer is currently the only vendor marketing Chromebook Tab, with Chromebook's established presence in the higher education market, Google's encounter with Apple in tablets for primary and secondary education is worth watching.

Looking into the fourth quarter, which is traditionally a high season, global tablet shipments are supposed to increase from the third quarter. However, fourth-quarter 2018 tablet shipments are estimated to slip 2.3% from the prior quarter due to plunging white-box tablet shipments. On the other hand, the top five tablet brands will deliver performance in line with high season expectation, sequential growth to exceed 15%, supporting fourth-quarter 2018 global tablet shipments.

Key factors affecting tablet shipments

4Q18: Supply side

Boosted by year-end shopping demand, with the exception of Apple, the rest of the top five tablet brands will enjoy a sequential growth of more than 15% in fourth-quarter 2018.

Demand for Apple's low-price 9.7-inch iPad waned with the back-to-school season coming to an end in the third quarter. Furthermore, the new product launch is expected to make little contribution so fourth-quarter shipments are likely to go down.

Lenovo, Huawei and Samsung all had new products coming on the market in fall 2018, mostly 10-inch plus models, which will boost their fourth-quarter shipments.

Brand tablets will significantly threaten the white-box segment in fourth-quarter 2018. As Amazon and Lenovo position and price their products similar to white-box tablets, they will snatch the largest market shares from white-box vendors.

Table 1: Key factors affecting tablet shipments, 4Q18 (Supply)

Factor

Item

Analysis

Influence on shipments

Supply

Brands

Apple

Apple's shipments will decline from the prior quarter with the back-to-school promotion coming to an end and new iPad Pro performing below expectation in the fourth quarter.

↓★

Samsung

Samsung's new 10-inch plus tablets will moderately buoy 4Q18 shipments and its low-end tablets will penetrate into the white-box segment so its shipments will show growth.

↑★★★

Lenovo

Lenovo will bring a massive number of new tablets on the market to target year-end shopping demand so its shipments will ramp up.

↑★★★

Amazon

Amazon's shipments began to recover in3Q18 and are expected to further trend up with promotional campaigns kicking off in 4Q18.

↑★★

Huawei

Targeting shopping season demand, Huawei plans to launch two new 10.1-inch models in 4Q18, sticking to its strategy of introducing cost-effective products.

↑★★

Note: The more stars, the higher the influence. ↓ indicates negative influence, ↑indicates positive influence.
Source: Digitimes Research, October 2018

Component supply shortage will ease in fourth-quarter 2018 with the high season coming to a close. Costs of display panels and memory modules will come down or remain steady.

The only exception is PCB. PCB costs will slightly rise as upstream suppliers hike their prices to reflect environmental costs. However, the increase is only marginal and thus makes little impact on tablet shipments.

Table 2: Key factors affecting tablet shipments, 4Q18 (Supply)

Factor

Item

Analysis

Influence on shipments

Supply

Components

Panel

Amid weak demand and easing supply after high season, costs of tablet panels will be falling back.

↑★

Memory

Memory shortage will ease. DRAM and NAND flash prices will likely trend downward.

↑★

PCB

With price hike by upstream suppliers, PCB quotes will rise about 5%.

↓★

Passive components

MLCC costs remain on an upward trend. However, as they only account for a nominal share of the total tablet cost, the rise in their prices will make little impact on shipments.

-

Note: The more stars, the higher the influence. ↓indicates negative influence, ↑indicates positive influence.
Source: Digitimes Research, October 2018

4Q18: Demand side

The fourth quarter is traditionally a high season with Thanksgiving, Christmas and New Year holiday shopping demand in Europe and America. There will also be new products coming on the market to further spur demand.

Amazon and Lenovo target emerging markets with low-cost tablets, which will encourage consumers to make upgrades and buoy shipments to emerging markets in the fourth quarter.

Smartphone screens keep on growing in size. iPhone XS Max comes with a 6.5-inch display. Huawei has also marketed a 7.4-inch model. Large-screen phones will eat into the tablet market.

Phones priced over US$1,000 will become the norm for the high-end segment, squeezing consumer spending budget for tablets especially in the quarter following the launch of new iPhones.

Table 3: Key factors affecting tablet shipments, 4Q18 (Demand)

Factor

Item

Analysis

Influence on shipments

Demand

Consumer market

Mature markets

With the year-end shopping season continuing from 3Q18 to 4Q18, brand tablets will enjoy growing shipments.

↑★★

Emerging markets

New brand tablets to launch in the fourth quarter will come with record low price tags, spurring sales in emerging markets.

↑★

Other

Large-screen smartphones

New smartphones come with larger and larger displays, squeezing the demand for tablets.

↓★

High-end smartphones

For example, new iPhones with a high price tag will likely eat away consumer spending budget for iPad in 4Q18.

↓★

Note: The more stars, the higher the influence. ↓ indicates negative influence, ↑indicates positive influence.
Source: Digitimes Research, October 2018

Global tablet

Global tablet shipments came to 44.89 million units in third-quarter 2018, soaring 21.1% on quarter while also showing a significant 6.1% growth from a year earlier, exceeding expectation. Global tablet shipments performed well in the high-season.

Among the non-Apple camp, Samsung, Huawei, Amazon and Lenovo all delivered sequential growth in the third quarter with Amazon particularly showing a 113.2% surge in shipments due to a lower base period.

White-box tablet shipments exhibited flat growth from the second quarter, showing no significant high season effect.

Global tablet shipments are estimated to total 43.85 million units in fourth-quarter 2018, down 2.3% on quarter and 4.7% on year.

The fourth quarter will experience little high-season effect amid a rapidly declining white-box tablet segment.

With demand from the white-box tablet market significantly weakening, to achieve economies of scale, white-box tablet vendors already prepared the inventory they need for the second half of the year in the third quarter. As a result, they will cut down orders for tablets in the fourth quarter so fourth-quarter white-box tablet shipments will plunge 35.6% sequentially. Brand tablet shipments, on the other hand, will rise 10.2% sequentially, offsetting some of the impact by the weakening white-box tablet segment.

Chart 1: Global tablet shipments, 3Q17-4Q18 (m units)

Source: Digitimes Research, October 2018

Shipments breakdown

Shipments by product

Third-quarter 2018 iPad shipments outperformed expectation, increasing 20.4% from the prior year to reach 11.26 million units.

In the third-quarter back-to-school shopping season, iPad (2018) shipments showed the largest increase, up 94.2% sequentially.

Fourth-quarter iPad shipments are estimated to come to 10.71 million units, down 4.9% sequentially, mainly because Microsoft, Google and Samsung will all bring new high-end tablets on the market in the fourth quarter, pressuring 10.5-inch and 12.9-inch iPad Pro.

New iPad Pro will also enter the market in the fourth quarter but at a later date than the other vendors' devices. Shipments will also be delayed, allowing the competitors to get ahead of the game.

The non-Apple camp shipped a combined total of 21.32 million tablets in third-quarter 2018, soaring 41.5% on quarter to exceed expectation.

With the market entering high season in the third quarter as well as non-Apple brand vendors launching a slew of new tablets, their shipments significantly ramped up.

The high season effect is expected to extend into the fourth quarter, buoying shipments by the non-Apple camp to 25.21 million units, up 18.2% sequentially.

White-box tablet vendors shipped a total of 12.31 million units in third-quarter 2018, maintaining flat growth from the prior quarter in line with expectation.

Demand arising from education tablet tenders supported white-box tablet shipments.

Despite the fourth-quarter high season, the white-box tablet segment will continue to struggle with pressure from low-cost brand tablets, so fourth-quarter white-box tablet shipments are estimated to come to 7.93 million units, down 35.6% sequentially.

Chart 2: Shipments by product - iPad, non-iPad branded and white-box, 3Q17-4Q18 (m units)

Source: Digitimes Research, October 2018

Chart 3: Shipment share by product - iPad, non-iPad branded and white-box, 3Q17-4Q18

Source: Digitimes Research, October 2018

Shipments by vendor

The rankings among brand tablet vendors in the third quarter showed a slight difference from those in the second quarter. The top three remained to be Apple, Samsung and Huawei but Amazon surpassed Lenovo to regain the No. 4 spot thanks to increasing shipments.

Benefitting from back-to-school shopping demand, Amazon's third-quarter shipments soared from the level seen in the second quarter.

Thanks to Chromebook Tab sales, Acer moved up to No. 6 while Microsoft dropped to No. 7.

The fourth quarter is the best season for Amazon so its shipments are estimated to surge 16.4% on quarter, buoying its share to 12.5%, up 2pp from the prior quarter.

Samsung, originally holding a similar share to Huawei, is expected to enjoy a significant increase in shipments of 10-inch plus tablets in the fourth quarter, to lead Huawei by a widening distance.

Chart 4: Shipments by vendor, 3Q17-4Q18 (m units)

Note: Google and its brand vendor partners' jointly developed tablets are included in Google's shipments
Source: Digitimes Research, October 2018

Chart 5: Shipment share by vendor, 3Q17-4Q18

Note: Google and its brand vendor partners' jointly developed tablets are included in Google's shipments
Source: Digitimes Research, October 2018

Shipments by panel size

The share of 7.x-inch models among brand tablet shipments in third-quarter 2018 held steadily above 15% while the share of 10.x-inch plus models expanded significantly.

7.x-inch models remained to be the mainstream products for the low-cost tablet segment. Moreover, as consumers are becoming less willing to buy premium tablets, 7.x-inch tablets could still hold on to a certain share of the market, around 15%.

Contributed by iPad (2018), shipments of 9.x-inch tablets showed some growth. However, as shipments by non-Apple vendors increased more significantly than those of iPad 9.7, the share of 9.x-inch tablets slid 7.4pp from the prior quarter.

Looking into fourth-quarter 2018, the share of 9.x-inch tablets will drop with iPad (2018) shipments on the decline.

New 11-inch iPad Pro will replace the old 10.5-inch model but it will not be able to boost the share of 11.x-inch tablets due to limited shipments.

The category of 9.x-inch tablets mainly comprise iPad (2018), of which the shipments will decline in the fourth quarter, causing the share of 9.x-inch tablets to slide.

10.x-inch tablets have become mainstream. Despite pressure from shipments of Amazon's 7-inch and 8-inch models, their share will have a chance to break through the 40% mark in first-quarter 2019.

Chart 6: Shipments by panel size, 3Q17-4Q18 (m units)

Source: Digitimes Research, October 2018

Chart 7: Shipment share by panel size, 3Q17-4Q18

Source: Digitimes Research, October 2018

Shipments by touchscreen technology

Non-Apple vendors' tablet shipments increased more significantly than iPad shipments in third-quarter 2018, so the share of GF2 touch screen technology slid 5.3pp from the prior quarter.

The share of on-cell touch screen technology ramped up thanks to growing 10-inch plus tablet shipments.

For fourth-quarter 2018 outlook, with non-Apple tablet shipments continuingly on the rise and iPad shipments on the wane, the share of GF2 touch screen technology will dip 4.8pp sequentially while the share of GFF touch screen technology will grow 3.4pp.

Chart 8: Shipments by touchscreen technology, 3Q17-4Q18 (m units)

Source: Digitimes Research, October 2018

Chart 9: Shipment share by touchscreen technology, 3Q17-4Q18

Source: Digitimes Research, October 2018

Shipments by OS

Boosted by strong performance of non-Apple vendors, the share of Android tablets among third-quarter 2018 shipments ramped up 5.2pp from the prior quarter, coming close to 60% while the shares of iOS and Windows tablets both slipped.

Benefiting from Chromebook Tab shipments by Acer in the third quarter, the share of Chrome OS reached 0.3%.

Going into fourth-quarter 2018, iPad shipments will wane, putting the share of iOS on a continuing decline, to go down 4.8pp sequentially.

Shipments by non-Apple vendors will all trend upward in the fourth quarter, buoying the share of Android tablets up 4.7pp.

Chart 10: Shipments by OS, 3Q17-4Q18 (m units)

Source: Digitimes Research, October 2018

Chart 11: Shipment share by OS, 3Q17-4Q18

Source: Digitimes Research, October 2018

Shipments by AP supplier

In terms of processors for the third-quarter 2018 tablet shipments, the rankings stayed unchanged from the prior quarter.

The share of MediaTek processors showed a significant increase, shooting up 7.4pp from the quarter before, thanks to growing Amazon shipments.

Although the other non-Apple vendors as well as Apple all enjoyed shipment growth, their increases were not as large as Amazon's, causing the shares of Apple and Qualcomm processors to slide from the levels seen in the prior quarter.

The rankings in the fourth quarter are expected to stay the same as those seen in the third quarter. Declining iPad shipments will result in a shrinking share of Apple processors.

The shares of non-Apple processors will all show growth, boosted by increasing shipments of non-Apple tablets.

Chart 12: Shipments by AP supplier, 3Q17-4Q18 (m units)

Source: Digitimes Research, October 2018

Chart 13: Shipment share by AP supplier, 3Q17-4Q18

Source: Digitimes Research, October 2018

Shipments of detachable notebooks

Digitimes Research has redefined detachable notebooks starting from third-quarter 2018, no longer considering devices with cover keyboard as detachable notebooks. Volumes that are excluded are primarily Microsoft's Surface Pro product line. Digitimes Research figures concerning detachable notebooks prior to third-quarter 2018 have all been revised in line with the new definition.

Chart 14: Detachable notebook shipments, 3Q17-4Q18 (k units)

Source: Digitimes Research, October 2018

Chart 15: Shipments of detachable notebooks by OS, 3Q17-4Q18 (k units)

Source: Digitimes Research, October 2018

Chart 16: Shipment share of detachable notebooks by OS, 3Q17-4Q18

Source: Digitimes Research, October 2018

Shipments from Taiwan makers

Tablet shipments by Taiwan-based ODM expanded 6.3% on quarter thanks to growing iPad shipments. However, their growth was smaller than that of China-based ODM because Amazon's third-quarter shipments of tablets, manufactured by China-based ODM Huaqin, shot up 113.2% from the second quarter. As a result, the share of tablet shipments by Taiwan-based ODM dropped.

Looking into fourth-quarter 2018, shipments by Taiwan-based ODM are estimated to maintain flat growth from the prior quarter.

Chart 17: Shipments from Taiwan makers and share of global shipments, 3Q17-4Q18 (m units)

Source: Digitimes Research, October 2018

Compal's share of Taiwan shipments exceeded 70% thanks to increasing iPad (2018) shipments in third-quarter 2018.

Going into the fourth quarter, Compal's share will slip 4.2pp sequentially due to waning iPad (2018) shipments.

Foxconn's share of shipments will likely expand 3.8pp sequentially with new iPads hitting the market.

Quanta manufactures Pixel Slate for Google and Surface GO for Microsoft. Its share of shipments will continue on an upward trend in the fourth quarter thanks to increasing shipments of these new tablets.

Chart 18: Taiwan tablet shipments by maker, 3Q17-4Q18 (m units)

Source: Digitimes Research, October 2018

Chart 19: Taiwan tablet shipment share by maker, 3Q17-4Q18

Source: Digitimes Research, October 2018

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