Japan TV vendors saw their proportion of 50-inch and above size Ultra HD TV sales drop throughout mid-2014 into the third quarter, according to Digitimes Research.Sharp in particular reported that its overall sales proportion of 55- and 58-inch Ultra HD TVs in April 2014 dropped from 64.8% to 46.1% in July.Other vendors who saw their proportion drop were China-based vendors, as local vendors pushed low-priced, mid-range units sized between 39- to 50-inch in order to expand their market shares.Digitimes Research added that in July 2014, 22% of TV sales in Japan were for Ultra HD TVs, largely driven by sporting events and increased 4K viewing options.Mitsubishi Electric meanwhile recently released Ultra HD TVs sized 58- and 65-inch that come equipped with the company's home energy management system (HEMS), and the Japan government is already initiating plans for 8K viewing services to occur as of 2018, noted Digitimes Research.

Seeing the lack of strong growth in the PC market and excess wafer capacity, Intel is looking to resolve its problems by pushing it mobile product business. However, ARM's dominance in the mobile industry is forcing Intel to rely on giving out subsidies to partners to increase its presence in the market which is impacting its profitability as well as its product positioning in the market.Intel is cooperating with China-based application processor designer Rockchip to start a new business model and will push new chip and solution design services. Through Rockchip's ecosystem in China, Intel is hoping to start up a wafer OEM business and will gradually turn to focus on customized x86 chip products to make price-friendly and competitive products that are more suitable for emerging markets.To accelerate the establishment of its ecosystem, in addition to subsidies, Intel is also cutting its chip prices, but most vendors still prefer ARM-based solutions as Intel's solutions still lack performance, offer less flexibility for components, and have a cost disadvantage.Intel mainly eyes Rockchip's software support and existing back-end component and channel relationships. As for why Rockchip decided to partner with Intel, Digitimes Research believes the fierce competition between ARM-based chip products which has caused profits to drop, is the main reason Rockchip decided to work with Intel.Intel's baseband solutions and x86 extensibility are also key factors behind the partnership in 2014.

Intel's cooperation with Fossil to develop smartwatches equipped with Android Wear will help Intel expand its influence in the wearables market as well as extend Google's influence in the market.Samsung Electronics, Motorola, LG Electronics and Asustek Computer have already unveiled Android Wear-based smartwatches all adopting Qualcomm chips. Fossil is the first vendor to decide to adopt an Intel processor for its Android Wear smartwatch.Among Google's 11 Android Wear partners, five are chip players and six are system vendors. High Tech Computer (HTC) is currently the only one that still has not yet unveiled the processor it is using for its smartwatches.Motorola's Android Wear smartwatch adopts a Texas Instruments chip, while Sony announced its entry into Android Wear development and unveiled its SmartWatch 3 during IFA 2014, but the smartwatch's processor is currently still unknown, said Digitimes Research.

Rumors that Intel is considering investing in China-based Spreadtrum have been circulating in China's IT industry recently and Digitimes Research believes the rumors can explain why Spreadtrum's product development completely stopped recently. Spreadtrum may enter a partnership with Intel to start developing x86-based products in-house.If Spreadtrum enters the x86 ecosystem, the vendor may outsource its chip manufacturing to Intel. The cooperation would allow Spreadtrum to gain advantages from Intel's advanced manufacturing processes to effectively reduce costs, while Intel will also be able to fill some of its empty capacity, Digitimes Research said.Unlike Rockchip, Spreadtrum has its own baseband technologies and the company does not seem to have a reason to cooperate with Intel; however, Spreadtrum's products are mainly focused on the entry-level segment and emerging markets, areas that still have business opportunities, but are unlikely to contribute high profits due to fierce competition.Although the China-based chip designer is looking to push its products to higher-end markets, the company is unlikely to do so as it is unlikely to be able to create unique innovations out of existing ARM-based products.In addition, for an IC designer that mainly focuses on ARM-based products, the wafer industry's insufficient available capacity is limiting the order volumes Spreadtrum can place. Even Taiwan Semiconductor Manufacturing Company (TSMC), which has the best yield rates in the industry, has always been unable to satisfy all its clients' capacity needs. Placing orders with TSMC also creates higher costs.Meanwhile, other wafer foundry houses are unable to match TSMC in terms of advanced manufacturing processes and are usually chip designers' second choice for mass production.Although Spreadtrum is backed by the China government and has been receiving subsidies for creating masks, the company's spending is still rather high. To expand its market reach and further lower its production costs, seeking help from Intel would be a reasonable move.The x86 architecture is currently still a minority in mobile applications, but the leader in the PC computing market. With Intel's aggressive investment and planning, the PC architecture has started to enter the tablet market and joining the x86 camp would be an excellent choice for Spreadtrum.Intel also has an enormous empty capacity that needs to be filled. Intel's plan to push into the Android-based tablet market is not only for expanding new applications, the CPU giant is also looking to pump up its x86 chip OEM business. Through cooperation with Rockchip and Spreadtrum, Intel is expected to be able to expand the market's scale and create bigger opportunities for its OEM business.Despite Intel having been trying to expand its chip OEM business, Intel is only achieving limited results from entering the ARM-based chip industry because the manufacturing process of x86-based chips is not compatible with ARM-based chips and conducting adjustments to make the process compatible is rather difficult.However, if Intel is able to turn existing chip designers to adopt the x86 architecture, they will be able to directly place their orders with Intel's wafer foundries, helping to resolve Intel's empty capacity issues, while chip designers can also benefit from Intel's advanced processes to create differentiation with its competitors.

The bit growth of mobile DRAM is expected to expand 37.5% on year in the second half of 2014, buoyed by a 30% annual growth in smartphone shipments as well as rising demand for mobile DRAM chips from the tablet sector, according to Digitimes Research.Bit growth of mobile DRAM in the smartphone sector is bound to increase along with the 4G LTE era and the increase in smartphone hardware specifications such as the growing adoption of Full HD displays.Vendors including Samsung Electronics, LG and Sony Mobile Communications have launched smartphones with 3GB RAM memory capacity.With global smartphone shipments are expected to expand 17% sequentially in the fourth quarter of 2014, overall mobile DRAM bit growth in the smartphone sector is expected to reach 44.8% in the second half of the year, Digitimes Research estimated.Meanwhile, demand for mobile DRAM chips from the tablet sector will also increase significantly in the second half of 2014, with bit growth rates in the branded and white-box tablet sectors increasing 29% and 23.3%, respectively, from a year earlier.

IFA 2014 in Berlin, Germany during September 5-10 showed that Android tablet vendors are not looking to offer entry-level models for price-cut competition and instead offered models equipped with 3D depth-of-field cameras, water-, dust- and shock-proof features, high-resolution touch panels, and LTE etc. to increase added value. 8-inch has replaced 7-inch to become the mainstream screen size for new models to be launched in the second half of 2014.Small-size Windows-based models showcased at IFA 2014 saw prices fall US$100 from those in early 2014 and are currently at a level similar to that of Android-based entry-level models thanks to Microsoft's license-free policy for small-size tablets and assistance from Intel's China Technology Ecosystem (CTE) project to help lower costs, Digitimes Research said.Following the launch of Asustek Computer's Intel fifth-generation Core processor-based fanless Windows detachable tablet at Computex 2014, many first-tier PC vendors unveiled US$1,000 detachable tablets at IFA 2014. To defend its position, Asustek also unveiled its mid-range TF300TA at the show.

China panel makers are starting to show signs of shifting production capacity on 8.5G lines from large-size applications to small- to medium-size ones in order improve operating margins and to avoid excess supply of large-size panels produced from the lines, according to Digitimes Research. CEC Panda LCD Technology has taken such measures on its Nanjing-based facilities where it has allocated 30% of its production to TV panels and 70% to high-end smartphone panels, tablet panels and even high-end notebook panels. Additionally, Tianma Optoelectronics has improved its operating margin to 5.4% in the second half due to shifting similar capacity to small- to medium-size applications and has also switched focus away from feature phone panel production to smartphone panel production. Digitimes Research added that it also sees similar moves in production shifts from Infovision Optoelectronics in 2014.

Digitimes Research expects global tablet shipments to reach 68.51 million units in the third quarter, up 23.8% sequentially and 9.1% on year, and non-Apple tablet vendors' shipments, which suffered from weaker-than-expected performance during the second quarter, are expected to see a recovery in the quarter.Apple's tablet shipments are expected to benefit from inventory preparations for the second-generation iPad Air in the third quarter, while white-box players' shipments are expected to maintain at a similar level compared to the previous year.In the fourth quarter, although the tablet market will benefit from Android L, a significant upgrade to the Android platform, demand for large-size inexpensive Windows-based models, and stable growth of tablet with phone-functions in emerging markets, the market is still unlikely to avoid reaching saturation. Digitimes Research expects the global tablet market to achieve an on-year growth of only 0.5% in the fourth quarter.Although iPads are expected to enjoy a shipment recovery in the third quarter, volumes in the fourth quarter will decline over 10% compared to the same period a year ago because Apple is lacking a new 7.85-inch iPad product, demand from mature markets is dropping, and new iPhones will replace some iPad demand.Samsung Electronics' third-quarter shipments will rebound slightly and the company is expected to expand its 3G service bundling plans and offer price cuts in the fourth quarter to boost sales.Lenovo and Asustek Computer will both push inexpensive tablets with phone-functions and entry-level Windows 2-in-1 devices in the second half. Vendors that have their own platforms such as Amazon, Microsoft and Google are expected to see their shipments continue to decline.Taiwan-based tablet vendors' combined share in the global market will stop sliding in the second half.As for Taiwan-based makers, Foxconn is expected to enjoy strong shipment growth in the second half because of orders for the second-generation iPad Air and Xiaomi's tablets. Compal Electronics will also surpass Quanta with orders from Amazon in the fourth quarter.

Market share of smartphone vendors in China is likely to fluctuate significantly soon due to the development of 4G market and the roll-outs of the latest flagship models, highlighted by the shipment performance of new phones under the cooperation between Apple and telecom operators beginning in late third quarter 2014, according to Digitimes Research.Samsung Electronics will take the blunt first following the introduction of the new iPhone devices, expecting to see the market share it leads against Apple narrow to 10% as the prices of its flagship models still remain high and yet its brand popularity and product uniqueness are inferior to those of iPhone.Shipments of 4G smartphones in China will continue to gain momentum in the second half of 2014, resulting from aggressive marketing by telecom operators and growing market demand. However, Xiaomi Technology will lose market share to other brands due to its late start in the development of 4G models and lose its top-vendor title to Huawei in the fourth quarter of the year.Shipments of smartphones by Taiwan-based ODMs in the second half of 2014 will be weaker than expected as they have failed to land orders from Amazon and Facebook, while Microsoft Mobile has also slashed its orders for Lumia Windows Phones, Digitimes Research estimated.

Although the IT market has already started preparing for back-to-school demand, the global top-five notebook vendors' combined shipments and top-three ODMs' combined shipments only achieved 5-10% on-month growths in August, lower than those of the same month a year ago.However, their combined shipments in September and October are expected to achieve strong growths because vendors are still optimistic about year-end holiday demand. Microsoft's Windows 8.1 with Bing solution for inexpensive notebooks will also be an important growth driver.Among the top-five notebook brands, Hewlett-Packard (HP) and Acer both achieved over 25% on-month growth in August. As for on-year performance, Acer achieved four consecutive months of growth, while Asustek Computer has been seeing its shipments stay at about the same level as a year ago.The top-three ODMs' on-month shipment growths were between 4-8% in August.In addition to US$249 notebooks, HP, Acer and Asustek also released US$199 notebooks using Windows 8.1 with Bing, looking to snatch demand with low prices.Digitimes Research expects inexpensive notebook shipments to reach 5-6 million units in the second half, about the same level as Chromebook's 6-7 million units. With the addition of Intel's Classmate PCs, inexpensive notebook, which have characteristics and market positions very similar to netbooks, are expected to ship a total of 15 million units in 2014, accounting for 8-9% of global notebook shipments.