Lenovo's smartphone shipments in first-quarter 2015 reached only 8-9 million units, lower than the volume that Digitimes Research had previously estimated and about the same as the level a year ago due to high inventory built up during the fourth quarter of 2014. Lenovo brand image is relatively weak in the smartphone market and the fact that it has two smartphone brands - Lenovo and Motorola Mobility - is not helping its marketing. The two brands overlap in their targeting market segments and pricing ranges.Lenovo started pushing its 4G smartphone shipments at the end of the third quarter 2014 and achieved shipments of around 15 million units in the fourth quarter of 2014. Judging from Lenovo's component orders placed with the upstream supply chain in early 2015, Digitimes Research originally had expected Lenovo to ship at least 10 million smartphones in the first quarter.However, the China-based vendor's smartphone sales have been heavily relying on telecom carriers, and it shipments were greatly affected by quickly rising inventory in the fourth quarter of 2014 as China's telecom carriers had significantly adjusted their subsidization plans for handsets, weakening sales of smartphones bundled with telecom services.Meanwhile, Lenovo has been finding it difficult to build up a strong brand image in the local smartphone market. After launching the Lemon series product line for online marketing in December 2014, Lenovo has adjusted its smartphone lineup and is offering its Vibe series devices for the CNY1,500 and above price segment, the A series products for the sub-CNY1,000 price segment and the telecom channel, and the Lemon series for the sub-CNY1,000 price segment and the online market. But the China-base vendor's moves have so far been unable to improve its brand recognition.Lenovo originally expected the dual-brand lineup after its acquisition of Motorola Mobility would benefit its operation in overseas markets; however, the strategy instead is causing the two brands to compete against each other. The Motorola brand has seen stable demand in North America, and has also achieved significant results for its recently launched inexpensive smartphones in emerging markets such as Latin America and India. Against such a background, the China-based vendor introduced the inexpensive Motorola smartphone models to China in the first quarter, and the sales results were impressive. But Lenovo did not expect that such impressive results would come at a price: its Lenovo-branded phones were cannibalized by the Motorola devices.

Microsoft launched its latest Windows licensing fee subsidy program for Windows 8.1 in March which expanded the coverage of notebook models, adjusted subsidies, canceled the previous project's US$249 end-price ceiling, and made eMMC a standard specification for entry-level products, according to Digitimes Research's new report about Microsoft licensing. Vendors are able to place orders for the program before the end of June and notebooks adopting the operating system under the program can still be sold sell in the channel in the second half of 2015 despite the fact that Windows 10 will become available during that time. Digitimes Research believes the new subsidies should help boost consumer notebook ASPs, which have been weak since early second-half 2014, and prompt entry-level notebooks to adopt an ultra-thin form factor. Because of factors such as Microsoft already planning to release a new program for Windows 10 in July, brand vendors still have inexpensive notebook inventories accumulated from the fourth quarter of 2014, and specifications of Windows 8.1 notebooks may not be able support new functions in Windows 10, such as face recognition, despite these notebooks' eligibility to be upgraded to Windows 10 for free, Digitimes Research expects notebook vendors to take a conservative attitude about launching new inexpensive products using the Windows 8.1 program and will place their focuses on the Windows 10 one.

The global 10 largest EMS providers generated total revenues of US$319.2 billion in 2014, increasing 2.5% on year, according to Digitimes Research.Seven of the ten were Taiwan-based companies: Foxconn Electronics with US$135.5 billion, Pegatron US$38.5 billion, Quanta Computer US$29.8 billion, Compal Electronics US$27.2 billion, Wistron US$19 billion, Inventec US$14 billion and FIH Mobile US$6.8 billion, Digitimes Research indicated.The other three were US-based enterprises: Flextronics International ranking 5th with US$26.4 billion, Jabil Circuit ranking 7th with US$15.8 billion and Sanmina-SCI ranking 10th with US$6.2 billion.

March average retail pricing for 7W LED light bulbs (equivalent to 40W incandescents) in the China market decreased 21.4% on month to CNY29.10 (US$4.70), while 9W models (equivalent to 60W incandescents) slipped 11.6% to CNY38.80, according to Digitimes Research.Average retail prices for 40W- and 60W-equivalent LED bulbs in Japan in March stood at JPY1,740 (US$14) and JPY3,206 respectively, with falling 2.4% and 3.3%, Digitimes Research indicated.March average retail prices in other markets were: KRW9,883 (US$8.9, flat on month) and KRW13,889 (down 1.4%) in South Korea; US$20.70 (down 2.4%) and US$19.80 (up 2.1%) in the US; and EUR8.60 (US$9.40, down 10.4%) and EUR14.50 (up 2.1%) in Europe.Philips 40W-equivalent LED bulbs and Osram 60W-equivalent models in South Korea had the highest average lumen-price ratios of 95.2lm/US$ and 101.4lm/US$ respectively in March. In terms of luminous efficiency, Toshiba 40W- and 60-equivalent bulbs available in Japan had the highest average levels at 81.1lm/W and 105.1lm/W.

China's smartphone shipments are expected to have dropped over 30% sequentially in the first quarter due to decreased export shipment. China's first- and second-tier brand vendors were still digesting inventories for the domestic market from the previous quarter and China's small regional brand vendors posted results far weaker than expected performances.Digitimes Research originally estimated in January that China-based smartphone players' shipments in the first quarter would decline by about 20% sequentially. However, during visits to China in March, Digitimes Research's researchers found that the country's independent design houses (IDHs) and ODMs located in Shenzhen and Shanghai that mainly supply products to small regional vendors and white-box vendors nationwide were seeing sharps falls in shipments and orders compared to the previous quarter and a year a ago.The dismal situation has persisted since the end of the Lunar New Year holidays and has so far shown no sign of recovery.China's small regional brand vendors mainly target rural areas. Their products have been mostly in two price ranges, CNY700-1,000 (US$113-161) and around CNY1,500, in the past two years.In 2014, with first- and second-tier brand vendors aggressively pushing into both price segments, these regional vendors were left with little room in the market.China had a total of 600-700 small regional vendors during the peak of the first half of 2013, but in 2014, over 150 of them quit. Around the Lunar New Year holidays in February 2015, the industry saw another wave of company closures.Struggling for survival, those remaining players are focusing on models priced between CNY300-500, mostly using Spreadtrum's cheap 4G 3-mode TD-LTE solution; however, some of these players are pessimistic, and expect about 200 more of the small regional vendors to quit in 2015.

Lenovo is expected to ship less than 10 million smartphones in the first quarter of 2015 due to high inventories left over from the previous quarter as well as its marketing strategy and pricing for Lenovo- and Motorola-brand products, according to Digitimes Research.Lenovo managed to ship 15 million smartphones in the fourth quarter of 2014 thanks to increasing shipments of 4G models. It was expected to maintain its shipment momentum by shipping over 10 million units in the first quarter of 2015.However, affected by adjustments in subsidy policy at China-based telecom operators, which has weakened contract sales of smartphones, Lenovo may see its smartphone shipments decline to 8-9 million units in the first quarter, Digitimes Research estimated.Lenovo believed previously that its two brands would complement to each other in the global market. But sales of Motorola smartphones in the US have been steady recently, and the introduction of some entry-level models in emerging markets including India, Latin America and China has been successful. Thus, sales of Lenovo-brand smartphones have been squeezed by its sister brand, Digitimes Research commented.

China panel makers are continuing to move toward production of TFT Oxide displays for use in large-size applications in addition to AMOLED, with Tianma Microelectronics starting to make some of the biggest shifts, according to Digitimes Research's observations at the China 2015 FDP exhibition.Tianma has traditionally focused on small- to medium-size panel production but is shifting its focus to include Ultra HD (4K) TV panels in addition to various high-end and niche displays for use in the vehicle, medical and industrial segments that are expected to use the technology as the company aims to increase profitability through value-added products.BOE, China Star Optoelectronics Technology (CSOT) and CEC Panda also are moving toward production of Oxide displays in 2015 and are preparing to expand OLED large-size display production, which Digitimes Research believes will still need time to develop before becoming readily available due to complications with OLED material lifespan and production.China makers also noted they recognize there may be an oversupply in the large-size TFT LCD segment due to ongoing expansions of 8.5G facilities, and hence are now starting to aim for higher profit, value-added technologies aimed at the high-end panel segment, added Digitimes Research.

Based on recent product displays and talks with representatives at Tianma Optoelectronics at the FPD China 2015 exhibition, the company is actively pursuing OLED and LTPS TFT LCD production and expects new facilities to enter production by late 2015, according to Digitimes Research.The company is optimistic about business opportunities for LCD and AMOLED panels used in smartphones and wearbles devices such as smartwatches in addition to LCoS technology for use in smart eyewear. High resolution and small- to medium-size panels in addition to touch panels are what Tianma aims to promote more in the market and expects to receive orders from major vendors, the maker said.Tianma is currently constructing two new 6G LTPS TFT LCD and AMOLED lines and has a 5.5G LTPS TFT LCD line that will go into mass production by the end of 2015, the maker added.Also at the exhibition was China Star Optoelectronics Technology (CSOT), which is shaping its strategy around emerging technologies geared around the wearables industry, said Digitimes Research.

Although the launches of inexpensive Chromebooks using Rockchip's solutions were postponed recently, Google is not giving up plans to release such products in 2015, forcing Microsoft, which has been closely monitoring Chromebook development, to release two new inexpensive projects targeting the education and consumer markets. The projects are 11.6-inch clamshell-type notebooks priced at US$149-179 and set for release in mid-2015, at the earliest.Both notebooks adopt Intel's Bay Trail-T CR (BTCR) processors, while the one for educational purposes will be manufactured with Elitegroup Computer Systems' (ECS) help and will be sold mainly through the education channel that Intel and ECS built for their Classmate PC products. The end price for the product is estimated to be US$179.Meanwhile, the one for the consumer market will be developed and manufactured by China-based 3 Nod and sold via brand vendors. The end price for the model will start from US$149.Digitimes Research believes Google is looking to adopt Rockchip's solutions in its Chromebooks to further reduce hardware costs in order to expand its presence in emerging markets that are more price-oriented. The Chromebooks are expected to be priced starting US$179.In addition to the education market, Digitimes Research believes the Chromebooks are partly designed to be promoted to the consumer sector of emerging markets since Google has planned three different sizes, 11.6-, 13.3- and 15.6-inch, which is an unusual design for an education product, and Google's online education solutions for non-US markets have not yet reached a level similar to the one for the US market.Although Chromebooks only have limited presence in non-US markets, Microsoft, is treating Chromebooks as a major threat, and is taking aggressive action to suppress the devices' growth to prevent Chromebooks from penetrating into emerging markets like they did in the US.In addition to the activation of the two inexpensive 11.6-inch notebook projects, Microsoft may expand the project to cover models with larger sizes as Google's cheap Chromebook lineup covers sizes as large as 15.6-inch.

China-based touch panel maker Holitech Technology reportedly will raise funds to acquire Each Opto Electronics Industrial, BYD's electronics component department, and Pingbo Electronics, all makers of touch panel-related components. Digitimes Research believes the acquisitions will raise Holitech's position in the industry and boost its touch panel shipments to help it become the second-largest supplier in China as the acquired businesses will complement Holitech's weaknesses.The acquisitions may also allow Holitech to copy other China first-tier touch panel makers' business models and start developing high gross margin products such as fingerprint sensors and camera modules.Holitech's main business is entry-level touch panel production and after listing on the Shenzhen Stock Exchange in November 2013, the maker has seen its position in the industry rising. The company is therefore is aggressively raising money via the stock market to fund acquisitions.Holitech's main clients are China's white-box solution providers meaning the company only has indirect partnerships with China's smartphone brand vendors. Its plants are located mainly in Ji'an of Jiangxi Province, which compared to Shenzhen, has advantages over labor costs, allowing Holitech to become one of the top performers in terms of operating profits in China's touch panel industry.With the acquisitions, Holitech mainly aims to complement its product lines. Compared to Holitech, which mainly focuses on white-box clients, Each Opto's clients are mostly bigger players such as TCL, CoolPad and BBK. TCL is an especially important client as Each Opto currently supplies about 40% of the vendor's overall touch panel demand.Each Opto is also partnered with Taiwan-based Young Fast to develop high-end touchscreen technologies such as ultra-thin and slim bezel devices, which are abilities that Holitech lacks.With BYD having turned its focus to automobile and battery-related product lines, its electronics component business has grown less important and therefore BYD has decided to post it for sale.BYD's electronics component business includes touch panel and LCD module businesses, which are both existing product lines of Holitech, but the business' camera module product line is what has attracted Holitech to an acquisition since the component is still seeing growing demand and has strong potential for further development.China's first-tier touch panel makers O-Film and Truly both have camera module capacities enabling them bundle sales with touch panels in order to earn extra income as well as attract brand vendors to place orders.Since Holitech has already successfully boosted its touch panel shipments by bundling its LCD modules with the shipments, the company is expected to further improve its performance, if it is able to acquire a camera module business to expand its bundling services.Pingbo, located in Dongguan, China mainly manufactures GG-type touch panels, which are considered a lower-end specification product compared to other touch panel technologies. Pingbo supplies its touch panels mainly to China brand vendors such as Hisense.Holitech's tablet touch panels only account for 10% of its overall shipments and the company has entered the supply chain of Acer's tablets and recently expanded into the supply chains of Quanta Computer and Foxconn Electronics' (Hon Hai Precision Industry) to ship touch panels for their white-box tablet products.For 2015, in addition to keeping its existing customers, Holitech is also looking to recruit new clients; therefore, the company will need to dramatically increase its shipments in order to satisfy related demand. Acquiring Pingbo is expected to help resolve this issue.Upon entering 2015, the touch panel industry's reshuffling did not end after Wintek's financial reforms. Digitimes Research believes more China touch panel makers will choose to quit the industry due to difficulties raising funds from the capital market and the fact that profits are growing thinner.As a result, listed touch panel makers acquiring non-listed competitors to strengthen their competitiveness and industry positions as well as secure supply chains will continue.