The production value of Taiwan's IC testing and packaging industry is expected to grow 5.9% in 2014, higher than the 4.9% growth posted a year earlier, as well as the 4.2% growth projected for the global IC backend industry in 2014, according to Digitimes Research.The production value generated by Taiwan's IC backend service companies reached US$14.01 billion in 2013 compared to NT$13.36 billion a year earlier, said Digitimes Research. In 2013, the global IC testing and packaging industry grew by 3.5%.Efforts by Advanced Semiconductor Engineering (ASE) and Siliconware Precision Industries (SPIL) to ramp up their bumping, flip chip (FC), wafer-level package (WLP) and SiP packaging capacity have allowed them to cash in on the fast growth of the global smartphone and tablet markets, commented Digitimes Research.With the global IC inventory having already dropped to an 8-quarter low of US$15.88 billion in the fourth quarter of 2013 and falling further in the first quarter of 2014, major chipset suppliers are likely to begin to replenish their inventories in the second quarter of 2014, which will fuel the growth of Taiwan's IC backend service companies.

Global leaders in the sapphire industry, in attempts to return to profits from losses incurred in 2012-2013, will focus on increasing utilization rates rather than expand capacities in 2014. Therefore, the global sapphire capacity in 2014 will be approximately the same as that in 2013, Digitimes Research estimates.Korea-based STC is the globally largest sapphire maker with a monthly capacity of 1.37 million mm, followed by US-based Rubicon Technology and Russia-based Monocrystal (each with one million mm), China-based Harbin Aurora Optoelectronics Technology (500,000-600,000mm), Taiwan-based USI Optronics (400,000-500,000mm) and Taiwan-based Tera Xtal Technology (200,000mm), according to Digitimes Research.

The LCD TV panel surface area shipped in 2014 is expected to rise 8.7% on year as demand for TVs is expected to increase and the average TV panel-size increases, according to Digitimes Research.LCD TV panel demand was weak in the first quarter of 2014 as TV vendors aimed to clear out inventories, but is expected to grow 8% in the following quarter as vendors prepare to release new units.The increase in the second quarter will also help stabilize pricing for LCD TV panels, said Digitimes Research.Increased shipments of larger-size units will be the result of increased demand for Ultra HD TVs, most of which are expected to be 39.5-inch and above.

Depleting energy sources, climatic changes and rising power prices have highlighted the importance of energy savings and carbon reductions, and consequently, efforts have been made to optimize efficiency of energy use for buildings or factories. In line with the trend, the Tatung Group has been active in developing smart building/factory solutions to help users maintain an eco-friendly environment.Given growing expectations for factories and buildings to optimize energy efficiency through better monitoring of their facilities, demand for smart building/factory solutions is on the rise.Smart buildings/factories are crucial to corporation sustainable operations as well as overall environment. Pursuit of such goals will not seize until zero carbon emission is achieved, according to Liang Wen-jinn, general manager for SCADA Division under Tatung Co.Tatung, as former construction company, now is approaching centennial. Over the years, tremendous energy has been devoted to develop smart home appliances, energy-saving industrial applications, high-efficiency motors, and high-grade safety cables. Also, Tatung possesses comprehensive deployments in the solar and LED sectors, and boasts strong experience in providing automation services as well as undertaking massive projects. Moreover, software development resources has grown and become one of Tatung's strength as well. Its recent projects for the luxury property market have also been well-received, attesting to Tatung's achievements in the smart building/factory sector. Enabled by a strong integration of group resources and technologies, Tatung offers comprehensive solutions.The core of smart buildings/factories: The SCADA systemSCADA systems are crucial parts of smart building/factory solutions, Liang pointed out. Some users have equipped specific facilities with variable-frequency drives to save energy, but this is not sufficient because optimal energy-saving solutions rely on integrated energy consumption control based on data concerning power consumption of air conditioning, lighting, security control, etc., Liang explained. For example, control on valves of ventilation systems in addition to reducing load of air-conditioning chillers can enhance efficiency of energy use.Tatung has provided central monitoring services for state-run Taiwan Power Company, China Steel, water companies, food manufacturers, automakers, universities, colleges and public facilities for nearly 20 years. However, such previous services focused on maintaining regular operation and monitoring abnormal conditions. But Tatung has now integrated such monitoring services with smart energy-saving innovations to form smart SCADA systems.Smart energy saving enabled by Tatung Group synergyAn integration of its energy-saving equipment, safety materials and SCADA system software has allowed Tatung to provide smart building/factory solutions for various users in recent years.For example, Tatung helped an optoelectronics firm set up a rooftop PV system that also sheltered its facilities from the summer sun, which lowered indoor temperatures, as well as load for the chillers. In addition, based on analysis of production capacity and operation data on the four chillers collected by the SCADA system, it was found that three chillers were enough to attain the heat-dissipation target in fall and winter, and therefore a chiller was left idle to save energy by 25% during the colder months. Besides, the data enabled to the firm to determine the best time for running the manufacturing process, and its rescheduled production capitalized on off-peak power supply, saving its total electricity cost by 10%.Based on production data and information from the equipment monitoring, the optoelectronics firm was able to detect equipment wear and undertake precautionary maintenance to eliminate possible disruption to production. This allowed it to attain the goals of smart maintenance and smart manufacturing.According to Sun Yung-Fu, manager for SCADA Division under Tatung, a local courthouse has adopted a Tatung-developed SCADA system in combination with sensors to monitor air conditioning, lighting, power supply, fire prevention, entrance control and CCTV. The system automatically switches on and off facilities based on actual demand. It also forms a smart interconnected system to cope with emergency. For example, when a fire alarm sounds, the system swiftly locates the spot of the fire via the CCTV, and then switches on the emergency lights, eases all entrance control, and opens the gates to the parking lots.As the development of smart building/factory solutions is an endless pursuit, Tatung will keep optimizing its solutions in terms of content and design for different environments, Liang stressed. Most firms in the electronics sector have installed SCADA systems and some of them have begun collecting and analyzing data to enable the designs of energy-saving solutions, Liang indicated. In contrast, although some in the conventional manufacturing industries have adopted energy-saving measures, their efficacies are limited due to a lack of energy consumption data. Customized SCADA systems can help them significantly increase energy savings, Liang said.Taiwan and other parts of the world have been increasingly keen to track carbon footprints. Companies have to rely on SCADA systems to obtain objective data on carbon emissions so that they devise ways to meet stringent government rules and regulations, as well as strict requirements of their clients. Tatung is ready to do its utmost to help clients overcome these challenges.Liang Wen-jinn, general manager for SCADA Division, indicates that Tatung has developed various smart building/factory solutions by integrating its energy-saving equipment, safety materials and SCADA system software.

With most of the China-based panel makers aggressively eyeing the high-resolution small- to medium-size panel market but lacking experience, Digitimes Research believes that in 2014, China's LTPS small-to-medium-size panels will still mainly be on the HD level. However, in 2015, FHD shipments should start picking up. Whether China makers will be able to mass produce WQHD products in 2016 depends on their technological developments.China-based BOE, Tianma Microelectronics and China Star Optoelectronics Technology (CSOT) were the main players at the FPD China 2014 show in Shanghai, China. CSOT mainly showcased its large-size panel products, while BOE and Tianma had their emphases on small- to medium-size ones.Although BOE and Tianma have hown great ambition in developing high-resolution small- to medium-size panels, they still need to improve their immature mass production processes.BOE is mainly pushing the Ultra PPI feature for its small- to medium-size panels and the three panels it showcased at FPD China were: a 6-inch WQHD (2,560 by 1,440) panel, and two FHD (1,920 by 1,080) panels - one 5-inch and the 5.5-inch. They were all samples from pilot production and mass production for them have yet to begin.Tianma showcased its latest innovation in WQHD-based product lines: LTPS TFT-LCD, AMOLED and embedded touch panels. The maker has already started mass producing WQHD LTPS TFT LCD panels, but the volume remains low due to immature production technologies. Its AMOLED panels, which were also displayed at the show, are still at their lab development stage.China makers have started producing WQHD products, but a lack of related experience has resulted in low yield rates and unstable production, and it will take some time for them to overcome the issues, Digitimes Research believes.

March average retail price for 7W LED light bulbs (equivalent to 40W incandescent ones) in the China market slipped 11.0% sequentially to CNY33.9 (US$5.5), while 9W models (equivalent to 60W incandescent ones) saw a 2.9% decline to CNY44.0, according to Digitimes Research.Average retail prices for 40W- and 60W-equivalent LED light bulbs in the Japan market in March stood at JPY1,643 (US$16) and JPY2,596 respectively, with the former rising on month by 0.6% and the latter by 6.1%, Digitimes Research indicated.March average retail prices for 40W- and 60W-equivalent LED light bulbs in other markets are: KRW14,540 (US$13.6, flat on month) and KRW16,124 (down 0.3%) in South Korea; US$21.8 (up 8.5%) and US$22.0 (down 1.3%) in the US; EUR13.4 (US$18.5, down 2.9%) and EUR15.2 (down 13.1%) in Europe.Osram 40W- and 60W-equivalent LED light bulbs available in South Korea had the highest average lumen-price ratios of 69.6lm/US$ and 113.1lm/US$ respectively in March. In terms of luminous efficiency, Toshiba 40W- and 60W-equivalent LED light bulbs for sale in Japan had the highest average levels of 74.6lm/W and 97.4lm/W respectively.

In March, global top-5 notebook brand vendors and top-3 ODMs both achieved an over 25% on-month shipment growth due to February's weak shipments caused by inventory adjustments, orders for new products and end of support of Windows XP in early April, according to Digitimes Research's figures.Toshiba, Hewlett-Packard (HP), Lenovo and Acer all achieved over 30% on-month notebook shipment growth in March. Toshiba had over 40% on-month growth for its notebook shipments in March because of new product launches and extra orders for trying to fill in the gap created by Sony's leaving that market.HP shipped over three million notebooks in March, while Dell's shipments in the past three months were all weaker than those in the previous year. Lenovo was the second-largest vendor, trailing HP by 300,000-500,000 units in February and March.Wistron enjoyed an almost 40% on-month growth in March, while Quanta Computer and Compal Electronics both had over 25% on-month growth.As for Samsung Electronics, which has turned conservative about the notebook industry, the company is planning to ship 6.3 million notebooks in 2014 with three million units being Chromebooks. Samsung will see a 70% on-year growth for its Chromebooks in 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.

The China government has lowered its rare earths export quotas for 2014 by 30% compared to 2013 after the actual export volume last year was lower than its original estimates. Prices of cerium, yttrium and terbium oxide (rare earths used in LED production) dropped 38.1%, 0% and 41.3% on year, respectively, in March and even more compared to their peaks in 2012, indicating that the pricing pressure for LED-use fluorescent powders have already started to ease. The US, the EU and Japan together filed an appeal to World Trade Organization (WTO) in 2012 claiming China's restrictions for rare earths exports violated WTO's regulations. WTO's ruled in favor of the complainants on March 26, 2014. Despite the victory in the WTO ruling, the complainants have been seeking ways to reduce their reliance on China's rare earths, since China has tried to use rate earths as bargaining chips in its military and diplomatic negotiations with other countries. Japan, which has been the biggest importer of China's rare earths, has been seeking alternative sources, such as imports from Australia. Japan has invested in India's rare earth production and has been looking for materials that can replace rare earths. With China's dominance in the rare earths market starting to wane, rare earths prices have also been affected, Digitimes Research has observed.

China white-box tablet players' shipments increased sequentially in the fourth quarter of 2013 thanks to strong demand from mature markets worldwide. Demand from emerging markets has also started picking up after mid-December 2013.In the first quarter of 2014, as the fierce pricing competition continued in the tablet market and Wi-Fi-based white-box tablet models contributed almost no profits, more and more white-box vendors started pushing tablets with phone functions. The move is expected to turn such devices into a mainstream from a niche segment of the tablet market, and help the tablet penetrate deeper into emerging markets.The numbers of tablet models with phone functions using MediaTek's integrated solutions, as well as their total shipments, have been increasing rapidly since early first-quarter, which has helped the Taiwan-based chip supplier catch up with its China-based competitors such as Allwinners and Rockchip. Digitimes Research expects tablets with phone functions to account for over half of all white-box tablet shipments in the second half.As the manufacturing process and technology evolve, the price gap between white-box tablets' single-core and dual-core chip solutions is now only less than US$1. Digitimes Research expects that dual-core solutions to completely replace single-core solutions by the end of the first half 2014 and become the mainstream specification for entry-level white-box tablets.Allwinners lost its advantages in the tablet chip market in the fourth quarter due to issues with its transition from single-core to dual-core solutions. Although it managed to resolve these issues in January 2014, Allwinners has yet to regain its momentum and was already surpassed by Rockchip in Wi-Fi-based tablet chip shipments in the first quarter.Meanwhile, MediaTek has already started to focus on pushing solutions for tablets with phone functions.Because their experience in smartphone development can be readily applied to tablet designs, many white-box players already started designing their tablets with phone functions using MediaTek's smartphone chip solutions to create new business opportunities as early as the first half of 2012. However, after releasing its tablet chip solutions, MediaTek has started monitoring how its clients use its smartphone chips.Because of their cheaper prices and sufficient supply compared to solutions for tablets with phone functions, MediaTek's entry-level smartphone solutions such as MT6572, MT6575 and MT6577 are still popular among white-box players doing tablets with phone functions. Most of China's independent design houses (IDHs) have purchased the smartphone solutions through non-official channels to avoid paying MediaTek the licensing fees for its solutions.With the dual-core processors becoming the mainstream specifications in the white-box tablet market, MediaTek's highly integrated processors (combining the application processor and baseband chip), with prices lower competitions from Allwinners, are expected to reach over eight million in shipments (both smartphone and tablet APs) to the China white-box tablet market in the first quarter and will challenge the quarterly 12 million mark in the second half.Digitimes Research believes MediaTek smartphone and tablet APs' high integration and related solutions' maturity, which can significantly reduce white-box players' development time for tablets with phone functions, will attract white-box players who have not yet tried MediaTek's solutions. With tablets with phone functions' proportion in total tablet shipments expected to continue growing, MediaTek's APs are expected to acquire 25% share in the white-box tablet market in 2014, up 10pp on year.