On December 17, 2013, China-based touch panel maker Truly Optoelectronics announced that it had entered a joint venture with the Huizhou City Government to invest in a 4.5G AMOLED line that will go into production in the second half of 2015 and have a production capacity of about 15,000 substrates a month. This follows similar agreements made between China-based Tianma and BOE with Visionox and EDO to establish a 4.5G AMOLED line, as well as developments by Century and China Star Optoelectronics Technology (CSOT) to further invest in AMOLED production. This means that from 2016 onwards, China's handset vendors are likely to mostly rely on AMOLED panels from local makers, according to Digitimes Research.With investments from the China government to increase local panel makers' production capacity and technological capabilities, coupled with efforts from local panel makers to attract engineering talent from abroad, the AMOLED panel industry is expected to see major breakthroughs starting 2016, and local handset vendors such as Huawei Device and Lenovo are likely to receive most of their panel supplies from makers such as BOE.On the other hand, Taiwan-based panel makers such as AU Optronics (AUO) are struggling to increase yields for AMOLED panels, with limited supplies going to HTC. Digitimes Research added that as this trend continues, more China-based handset vendors are likely to resort to local panel makers in the future for handset panels, leaving Taiwan makers' future in the market uncertain.

Taiwan-based IC design houses performed better than expected in the fourth quarter of 2013, yielding production value of NT$125.01 billion (US$4.12 billion), up 0.5% from the prior quarter, according to Digitimes Research.Strong demand for IC parts, including MediaTek's smartphone and tablet solutions, MStar Semiconductor's TV chips and Realtek Semiconductor's networking chips, helped ramp up production in the IC design sector, said Digitimes Research.However, most suppliers of LCD driver ICs, analog ICs, consumer ICs and IC design services saw their sales and ASPs decline in the fourth quarter, due to seasonal factors.Combined revenues of IC design service companies dropped 7.8% sequentially and 17.3% on year in the fourth quarter due largely to decreased orders from Samsung Electronics.However, sales of IC design houses for niche memory products were up 5.5% sequentially in the quarter on rising demand as well as prices for memory chips, including specialty DRAM parts.For all of 2013, the production value of Taiwan's IC design industry amounted to NT$468.22 billion, increasing 10.9% from the previous year. Additionally, the market share held by the top-10 IC design houses climbed to 66.7% in 2013 from 61.4% the prior year, Digitimes Research noted.

Combined handset shipments of Taiwan-based brand vendors and ODMs are expected to slide 15.4% sequentially in the first quarter of 2014, Digitimes Research has estimated.While most ODMs will suffer setbacks in shipments in the first quarter, Chi Mei Communication Systems (CMCS), a handset ODM under the Foxconn Group, will see its shipments increase slightly in the quarter thanks to JDM (joint design manufacturing) orders for feature phones from Nokia, said Digitimes Research.Handset vendor HTC will see its shipments continue to sink in the first quarter as sales of its main models have reached the end of their product life-cycles, while market demand for its mid-range models have been weaker than expected.Moreover, shipments of smartphones are likely to drop 27.2% sequentially in the first quarter due to decreased ODM orders from clients during the off-peak season, while HTC will not launch new flagship models until the end of the quarter, Digitimes Research noted.

Approximately 70% of the major components used in Samsung Electronics smartphones come from in-house production while about 50% of LG Electronics smartphones come from in-house production, according to Digitimes Research.Samsung Electronics relies heavily on panel production from Samsung Display while LG Electronics relies on panel supply from LG Display. Both companies are actively pushing up in-house production of smartphone touch panels, with LG increasingly relying on LG Innotek.Both Samsung and LG are bumping up development of OLED technologies and are continuing to develop their own production facilities in addition to increased production of plastic substrate materials, printed circuit boards, multi-layer ceramic capacitors, semiconductors, MEMS and other materials, added Digitimes Research.Such developments will push both Samsung and LG ahead in developing OLED smartphones, most notably curved or flexible ones, in addition to other flexible display applications, said Digitimes Research.

An estimated 62.14 million tablets will ship globally in the first quarter of 2014, decreasing 20.8% on quarter but increasing 10.9% on year, according to Digitimes Research.iPads will account for 29% of shipments, brand models launched by vendors other than Apple for 36.7%, and models launched by white-box vendors for 34.3%, Digitimes Research indicated.Of brand tablet shipments in particular, Android-based models will take up 50.5%, iOS-based 44.1% and Windows-based 5.4%. 7.9-inch models will account for 24.8% of the shipments, followed by 7-inch models with 20.2%, 9-inch models with 19.6%, 10-inch models with 18.3% and 8-inch models with 15.3%. In terms of touch solutions, GFF will account for 47.8% of shipments, GF2 for 42.9%, OGS for 5.3%, GG for 2.7% and G1F for 1.3%.Among vendors, Apple will have the largest global market share at 29%, followed by Samsung Electronics with 23.1%, Lenovo 4.7%, Asustek Computer 2.7%, Amazon 1%, Acer 1%, Microsoft 0.9%, Dell 0.8%, Google 0.5% and Hewlett-Packard 0.5%.Taiwan-based ODMs/OEMs will ship 22.5 million tablets in the quarter, taking up 55.1% of total brand model shipments. Foxconn Electronics will account for 51.7% of shipments, Pegatron 34.8%, Compal Electronics 5.1%, Wistron 4.3% and Quanta Computer 4.1%.

Taiwan panel makers' small- to medium-size panel shipments are expected to reach 338 million units in first-quarter 2014, down 8.2% on quarter and down 3.3% on year, according to Digitimes Research.Shipments in the vehicle and handset segments are expected to drop 4.8% and 6.8% on quarter, respectively, while those for DVD players, tablets and digital cameras are expected to drop 22.8%, 25.9% and 31.7%, respectively.Chunghwa Picture Tubes (CPT) and Innolux are expected to see the slightest decreases in shipments due to steady shipments from China-based handset vendors for mid-range and high-end smartphones. However, HannStar expects to see a decrease in orders from China-based white-box handset vendors, which will affect the company's shipments, said Digitimes Research.

Taiwan-based ODMs Ability Enterprise, Altek, Foxconn Electronics (Hon Hai Precision Industry) and Asia Optical shipped a total of 3.4 million digital cameras in the fourth quarter of 2013, decreasing 25.6% on quarter and 57.6% on year, according to Digitimes Research.Of the shipments, 37.8% were 16-megapixel CCD models, 33.2% 16-megapixel CMOS models, 19.1% 20-megapixel CCD models and 5.9% 18-megapixel CMOS models, Digitimes Research indicated.Ability accounted for 68.09% of the shipments, Altek 28.97%, Foxconn 1.47% and Asia Optical 1.47%.Nikon was the largest client accounting for 38.23% of shipments, followed by Fujifilm with 18.24%, Casio with 13.82%, Sony with 10.88%, Samsung Electronics with 10.88%, Panasonic with 4.41% and Olympus with 1.47%.The four ODMs shipped 19.943 digital cameras in 2013, slipping on year by 51.2% and sharing 31.2% of the global total.

There were an estimated 78.45 million tablets shipped globally in the fourth quarter of 2013, increasing 25% on quarter and by 29.8% on year, according to Digitimes Research.iPads accounted for 29.7% of shipments, brand models launched by vendors other than Apple for 36.6%, and models launched by white-box vendors for 33.8%, Digitimes Research indicated. Android-based models took up 51.2% of the shipments, iOS-based 44.9% and Windows-based 3.9%. 7-inch models accounted for 31% of the shipments, followed by 9-inch models with 25.4%, 7.9-inch models with 19.7%, 10-inch models with 15.8% and 8-inch models with 7.6%. In terms of touch solutions, GF2 accounted for 41.5% of shipments, GFF for 38.6%, OGS for 9.8% and GG for 9.5%.Among vendors, Apple had the largest global market share at 29.7%, followed by Samsung Electronics with 17.4%, Amazon 5.4%, Lenovo 4.2%, Asustek Computer 2.8%, Google 1.4%, Acer 1%, Dell 0.8% and Hewlett-Packard 0.5%.Taiwan-based ODMs/OEMs shipped 32.8 million tablets in the fourth quarter, with Foxconn Electronics accounting for 52.7%, Pegatron 24.4%, Compal Electronics 12%, Quanta Computer 6.6% and Wistron 4.2%.

Taiwan panel makers' large-size (9-inch and above) shipments in the fourth quarter of 2013 reached 64.3 million, down 0.4% on quarter, according to Digitimes Research.Additionally, Digitimes Research said that global large-size panel shipments reached over 176 million in the fourth quarter, up 0.7% on quarter while shipments for the year reached over 689 million, down 8.2% on year.Shipments for TV applications were up 0.7% on year while those for monitor, notebook and tablet applications were down 7.7%, 18.9% and 7.5% on year.In 2013, Taiwan panel makers were responsible for over 253 million large-size panel shipments, down 5.9% on year, added Digitimes Research.

Shipments of tablet-use application processors in China grew 8.3% on quarter and 19.5% on year in the fourth quarter of 2013, driven by the launch of new chips for tablet vendors to roll out new models during the year-end holiday season, according to Digitimes Research.China-based Rockchip Electronics ranked as the number one tablet CPU supplier in the fourth quarter, buoyed by its comprehensive product portfolio which attracted orders from brand as well as white-box makers, said Digitimes Research.Fellow company Allwinner Technology has expanded its product offerings, but not fast enough, causing stagnation in its shipment growth. Additionally, some of Allwinner's dual-core CPU shipments were delayed due to a shortage of wafer capacity.Although MediaTek has been trying to duplicate the business model of its turnkey smartphone solutions in the tablet chip market, shipments of its tablet-use APs lagged behind Rockchip and Allwinner in the fourth quarter because MediaTek has paid too much emphasis on the voice communication functionality of its tablet chips, which are not competitive for entry-level tablets.The top-three vendors – Rockchip, Allwinner and MediaTek – accounted for 75.7% of the tablet AP market in China in the fourth quarter, a decrease of 1.4pp from the previous quarter.Most other chip vendors, including HiSilicon Technologies, Nvidia and Intel, saw their shipments nearly double in the fourth quarter, but their shipment volumes were far behind the top-three suppliers due to low shipment bases, Digitimes Research concluded.