Japan Display's (JDI) WQHD panel technology is furthering its way into the high-end panel segment, most notably in China, where high-end panel demand is continuing to grow. JDI has not only improved production capabilities, but has also expanded its business model through cooperation with its subsidiary Taiwan Display (TDI), and has decided to make Star World Technology Corporation (STC), a Taiwan-based manufacturer of LCD modules (LCMs), into a subsidiary of TDI by acquiring approximately 80% of STC's outstanding common shares. Digitimes Research believes these factors will give JDI major advantages in China's small- to medium-size high-end panel segment and will increase services that meet diverse customer needs in addition to enhancing its cost competitiveness. JDI is already starting to show signs of emerging in the China market, with sales to customers in China increasing 2.4 times on year during the second quarter of 2014. The company also expects its revenues for 2014 to reach JPY750 billion (US$7.2 billion). Digitimes Research added that consumers can expect to see a new wave of handsets featuring JDI's WQHD panel technology hit the market in the fourth quarter of 2014. The technology will make up 60% of the company's overall handset panel revenues in the fourth quarter, up three-fold on year. The company's Pixel Eyes technology meanwhile is expected to make up 20% of JDI's sales during the quarter and that proportion will increase to 40% in the first quarter of 2015.

Shipments of 64-bit application processors (APs) are expected to start gaining momentum in the second half of 2014 due to combined efforts by chipmakers, system providers as well as the support from Google, according to Digitimes Research.Qualcomm has begun shipping 64-bit APs for smartphone applications with end-market devices built on these APs likely to hit the market in the third quarter. Meanwhile, MediaTek will begin large-volume shipments soon, positioning its 64-bit parts at the same levels as those of Qualcomm's but with more competitive prices.Shipments of Intel's x86-based 64-bit processors for tablet applications will also grow significantly in the second half, buoyed by its proper marketing strategy. MediaTek's shipments of tablet APs will also perform strongly due to its flexible policy, while Nvidia will begin to ramp up shipments of its Tegra K1 processors in the third quarter.Meanwhile, Allwinner Technology and Actions Semiconductor are expected to roll out their respective 64-bit solutions before the end of 2014, Digitimes Research estimated.

Sales of handsets in the India market reached 61.07 million units in the first quarter of 2014, with smartphones accounting for 17.59 million units or 28.8%. Notably, smartphone sales showed a 186% on-year growth in the first quarter compared to a 31% growth recorded in China, indicating rising growth momentum in India, according to IDC. The market research firm expects smartphone sales in India to top 80.57 million units in 2014, with a CAGR of over 40% in the next five years.Despite booming sales, a total of 78% of smartphones sold in India are tagged below US$200. Meanwhile, local brands are emerging as major players, with Micromax, Karbonn and Lava taking a 15%, 10% and 6% share, respectively, to serve as the second, third and fourth largest vendors in India, trailing after only Samsung Electronics (35%). Under such circumstances, is there room for Taiwan-based handset vendors or related handset component suppliers to make further deployments in India? Digitimes president Colley Hwang met with Micromax co-founder Rajesh Agarwal to discuss this issue and gain insights about the India market.Q: Could you talk about the major milestones for your companies in the past few years as well as your strategies for the future?A: Micromax started from scratch to become the top handset vendor within just a few years. We shipped 25 million handsets in 2013 and expect to sell 40 million units in 2014. Give us some more time we will have an opportunity to enter the world's top-10 vendors list.In the market place, Micromax has become a well-known brand in India and tends to also become the best platform for foreign products to use as a channel in the India market. We believe that any solutions available worldwide can make an entrance into the India market through Micromax's sales channels, and Micromax also does not confine itself to the handset business.Q: Could you also talk about the current status of India's handset market, and what are the strategies being adopted by Micromax to approach the market?A: We currently import about three million handsets a month from China, accounting for a significant portion of the monthly imports of 21 million handsets by India on the whole. Not only consumers are sensitive to pricing, the ever-declining ASPs have also continued to mount pressure on handset vendors. Micromax's ASP for handsets stood at US$60-70 in 2013 and is expected to drop to around US$55 in 2014.Q: China-based brand Xiaomi Technology has just made inroads into India. How do you assess the competitive pressure that China-based brands will bring into the India market?A: Xiaomi indeed has come out aggressively, but China is China and India is India, as social and cultural conditions of the two nations are not identical. For example, channel operators in India seldom leverage online marketing, and after-sale service support networks are one of the major advantages local brands have. The hunger marketing used by Xiaomi in China is not necessarily applicable in India. Micromax will win over Xiaomi in India as we have the ability to compete effectively with Samsung.Micromax posted revenues of US$1.2 billion in 2013 and is likely to ramp up its revenues to US$2.0 billion in 2014. To meet market demand more flexibly, Micromax has also been trying to manufacture handsets in-house. We are now importing SKD products from abroad for production of up to 600,000 units of mobile devices a month. We aim to control more value from production processes and we are also assessing the value to be generated from other segments, such as online networks and software.Micromax will focus on four strategic segments: Internet, handsets, smart TVs and LED products. The Internet is everywhere, whether it is for marketing or rendering value-added services. Micromax will pay strong attention to any online services which are instrumental to its business expansion and will look for proper opportunities to participate in these businesses.For the handset business, as we have been the number one local brand in India, we certainly will continue to optimize this advantage. Micromax has not only continued to deepen its deployments in India but we have also moved aggressively into neighboring countries including Bangladesh and Sri Lanka. Micromax now serves as the second largest handset vendor in these two countries. In addition to markets in South Asia, we are also looking for opportunities to make inroads into the Russia market, and also aim to hold a comprehensive advantage in emerging markets.Micromax believes that smart TVs serve as a key element in building a complete IT industry ecosystem. We will look for cooperation partners in the smart TV sector, and Taiwan-based makers may serve as the best partners. Micromax plans to go to public in 2015 and thus we will have more room to seek cooperation partners prior to being listed. Of course, we will be a worthy partner for Taiwan-based companies to approach for cooperation talks. While we believe that Taiwan could be the best partner for us, we do not yet have the whole picture regarding to how strong the ambition Taiwan's companies have for building up a handset supply chain in India.Micromax has held cooperation talks with a number of Taiwan-based companies including BenQ, but nothing has been ever finalized. A lack of in-depth understanding of each side has made the previous industry meetings empty talks. But now since the market environment has become more mature, companies from Taiwan and India may be able to find a new cooperation model.Micromax headquarters in Gurgaon, IndiaPhoto: Colley Hwang, Digitimes, August 2014Micromax co-founder Rajesh AgarwalPhoto: Colley Hwang, Digitimes, August, 2014

There will be an estimated 250 million handsets sold in the India market in 2014, 35% of which will be smartphones, an increase from the 23% in 2013. However, with a population of 1.2 billion and an underdeveloped infrastructure in India has resulted in a complicated system for marketing handsets and offering after-sale service. To collect direct information on the India market, Digitimes interviewed four India-based handset-marketing companies in Chennai and New Delhi and invited India-based enterprises and Taiwan-based MediaTek and Delta Electronics to attend two India-Taiwan business symposiums.Maintenance service provider TVS-ELocated in Chennai with 1,250 employees around India, TVS-E sells POS devices and printers and provides repair and maintenance services for handsets. According to TVS-E president K E Ranganathan, the largest difficulties for foreign enterprises to tap the India handset market are complicated and regionally varied market characteristics, consumers' high sensitiveness to price and the common use of SIM cards.Due to insufficient manpower, Taiwan-based companies are expected to be unable to independently operate business in India and it would be preferable if they could cooperate with local partners. It is difficult for Taiwanese to understand the logic of consumers of India and therefore base decisions on the common understanding of price. For example, TVS-E still sells dot matrix printers which are ponderous and low in printing speed but with are low priced to meet demand for printing large volumes of government documents at low cost.Taiwan-based IC distributor WPG HoldingsWPG has 11 marketing bases and 110 employees in India. President Rajeev Bajpai for WPG India agrees with TVS-E's opinion that the average sales price for a handset is lower than US$70 in the India market because consumers are very sensitive to price.Without customs duties, imported handsets are more competitive than locally made models in the India market. India-based vendors import more than 12 million handsets a year, including three million units by Micromax and two million units by Karboon.In Bajpai's point of view, Micromax, Karboon and other vendors with economic operational scale should find innovative solutions or expand product lines to create differentiation for India-based handset vendors, The current market situation is now an optimal time for operational transformation. Many India-based handset vendors have attempted to tap overseas markets but have not substantially succeeded and this is mainly because they do not have roadmaps for future products to create differentiation.HCL transforming operation from PC sale to after-sales serviceHCL Group, an early established PC company in India, has two subsidiaries, HCL Hightech and HCL Infosystem. HCL Hightech is an outsourced developer of software, like Infosys and Tata, with annual revenues of US$6.5 billion, while HCL Infosystem is responsible for marketing and after-sales maintenance and recorded 2013 revenues of US$1.6 billion consisting of 59% from distribution of products, 34% from retail sale of hardware, 6% from system services and 1% from training services.HCL was renamed from HCL-HP which was a joint venture with Hewlett-Packard (HP). In view of an unsatisfactory sales performance, HCL phased out its PC vendor agent business in 2013 and transformed its operations to providing after-sale services with partners including China-based Lenovo.HCL initially focused on after-sale services for Nokia when Nokia entered the India market. According to HCL's handset sale senior vice president Sutikahan Naithanl, Nokia initially profited well and reached a market share of nearly 90% but later its market share declined due to an inability to meet market demand. HCL then began cooperating with other international handset vendors (except for Apple), with Samsung Electronics being its key partner.With a handset market share of over 35% in India, Samsung has obtained a preferential customs tariff for importing SKD (semi-knock-down) handsets from Vietnam for assembly in India, with a monthly assembly of 4-5 million handsets currently, HCL noted. Taiwan-based vendors can also tap the India market through seeking cooperation with India-based makers.Consumer electronics retail channel RedingtonIt is still difficult to develop online trading in India especially because regulations vary among states, according to Redington president E H Kasturi Rangan. Therefore, Redingon with 56 offices around India to access consumers has a lot of room to grow, Rangan said.Redington has close business relation with Taiwan-based retail channel distributor Synnex Technology International, which holds a 22% stake in the company. Redington was listed on the India stock market in 2007 and generated revenues of US$4.2 billion for fiscal year 2013-2014, with slightly over 50% of the revenues coming from the India market - the remaining came from Africa, Turkey and other markets. Thus, cooperation with Redington is helpful for tapping markets in the Middle East and South Asia.President Kuo Gan-tsong for MediaTek IndiaIndia is absolutely a market worth tapping but business operation there should be on a long-term basis. When MediaTek came to the India market it was difficult to establish business relations with local enterprises. Therefore, MediaTek began by offering technical support and even assigned engineers to support local enterprises' R&D. The fast growth in the India handset market in recent two years has afforded MediaTek large room for business development there.In the future, Taiwan-based components makers can consider establishing cooperative technical support centers in India to win recognition from local industries. While interaction between Taiwan's and India's industries is increasing, it is better for Taiwan and India to reach an agreement to protect investment and set up an insurance mechanism to secure component trade.Peripheral maker ZebronicsZebronics produces audio devices and mice in India and is planning to broaden its product mix. The company has 750 employees in total and over 100 business operation bases and posts gross margins of 15%.In the India market, consumers like to ask for price cuts and are sensitive to prices. In addition, highest interest rates of over 12% render it difficult to operate businesses in India.HP India is highly interested in the 100 New Smart Cities project but is worried about insufficient support from the local supply chain, the company indicated. Therefore, HP India hopes to cooperate with Taiwan-based makers to compete for orders related to smart cities.Conclusion: India government and industries tout investment from TaiwanThe India market is not only India's 1.21 billion population but also includes neighboring Pakistan, Bangladesh, Sri Lanka and even Indian descendants living in eastern Africa, southern Africa and Caribbean islands.Except for Samsung Electronics and Apple, other top 10 smartphone vendors in the China market in the second quarter of 2014 were China-based ones. As the China smartphone market is approaching saturation, leading China-based vendors are also expected to tap the India market.In the India market, will more than 20 India-based handset vendors compete or cooperate with China-based smartphone vendors? The India government and industries have touted Taiwan-based makers' investment in India to boost development of India's handset industry. How do Taiwan-based makers view the potential market that they have not paid attention to previously? As China-based smartphone vendors have been making foray into the India market, there will be optimal time of only 1-2 years left for Taiwan-based makers to tap the market.

Desktop shipments are expected to enjoy growth in 2014 with Microsoft ending its support for Windows XP, but the all-in-one PC market, which focuses mainly on the consumer market and did not start enjoying demand until recent years, may not be able to benefit from the growth.Digitimes Research expects all-in-one PC shipments to drop 2.4% on year in 2014 because enterprise and consumer buyers have both used their budgets to purchase conventional desktops. Sony quitting from the PC market is another driver that is causing all-in-one PC shipments to drop in 2014.Apple and Lenovo are the top-2 vendors in the all-in-one PC market and the two's combined market share has been rising each year and is expected to surpass 60% in 2014.Most other vendors have seen their market shares decline. Despite Hewlett-Packard (HP) and Dell still having a large desktop client base, they are unlikely to reverse the situation.However, ODM/OEMs are seeing different results. TPV-Inventa Technology, Compal Electronics and Foxconn Electronics (Hon Hai Precision Industry) are expected to achieve on-year shipment growth in 2014 mainly thanks to increasing orders from Lenovo and HP. For 2014, TPV-Inventa's shipments will return to above two million units and Compal will have a chance to achieve over one million unit shipments for the first time.

US-based GT Advanced Technologies (GTAT), the exclusive sapphire supplier for Apple, is estimated to supply enough sapphire to make covers for up to 1.35-2.25 million 5.5-inch iPhones by the end of 2014 based on the progress of GTAT's sapphire production ramp, according to Digitimes Research.GTAT started sapphire production in August 2014 and expects revenue contributions from sapphire to begin in the fourth quarter, and Apple's fourth down payment is due in October 2014, these conditions signal that GTAT's sapphire production will not reach a large scale by the end of 2014, Digitimes Research indicated. However, GTAT is likely to ship sapphire at a large volume beginning the first quarter of 2015.In addition to production volume, cost for a 5.5-inch screen cover made from sapphire is estimated at US$100, much higher than US$5-10 for that made from reinforced glass, Digitimes Research noted.

Amazon released its mid-range to high-end Fire Phone in late-July 2014, looking to attract consumers to shop through Amazon's e-commerce platform with the phone's built-in Firefly technology, according to Digitimes Research.Since the main battlefield for online and e-commerce businesses in emerging markets is likely to shift to smartphones in the next few years, Amazon can capitalize with the launch of entry-level Fire Phones or release of a Firefly application for other handsets to expand its online shopping business in emerging markets, according to Digitimes Research.Amazon had been in talks with Taiwan-based handset ODMs for the production of entry-level Fire Phones prior to the release of the current Fire Phone.

Taiwan LCD monitor makers' shipments reached 22.14 million in the second quarter of 2014, up 10% on quarter and 0.9% on year, according to Digitimes Research.Makers such as Foxconn Electronics and Wistron saw orders increase as vendors prepare to release new units, which helped push Taiwan makers global shipment proportion to 64.2%.Going into the third quarter of 2014 Taiwan makers can expect to see a 6-7% increase due to demand during the peak season as well as to an increase in orders for new units as a result of Windows XP support coming to an end.Meanwhile, the ASP of LCD monitor panels is mostly increasing due to limited supply as panel makers are shifting their focus to production of small- to medium-size applications, added Digitimes Research.

Revenues for the six main LCD driver IC companies in Taiwan reached NT$28.18 billion (US$940.04 million) in the second quarter of 2014, up 13.1% on quarter and 4.1% on year, according to Digitimes Research.Shipments of LCD driver ICs alone by the top-six makers totaled NT$23.55 billion in the second quarter, increasing 10.4% from the previous quarter.In terms of applications, sales of small-size LCD driver ICs were up 13.6% sequentially in the second quarter compared to a 6.9% growth enjoyed by medium- and large-size LCD driver parts. Shipment growth rate and values of small-size driver ICs will continue to be higher than that of the medium- to large-size driver ICs in the third quarter.However, shipments of medium- and large-size LCD driver ICs for Ultra HD TV applications are expected to soar 105% sequentially in the third quarter although the ratio of Ultra HD TVs to total LCD TVs still remains low.Since the third quarter of each year is a peak season for the IT industry, ability for LCD driver IC vendors to secure sufficient wafer capacity at foundry houses will be essential for the makers to stabilize their shipments as well as to ramp sales growth.Meanwhile, due to a rebound in demand for low-cost smartphones in China in the third quarter, ILi Technology (Ilitek) will take the opportunity to ramp up its shipments of WVGA driver IC parts. Himax Technologies is also expected to see its shipments of LCD driver ICs for smartphone applications pick up stream in the third quarter thanks to a rebound in orders from clients in Korea.

Combined revenues of the top-three Taiwan-based foundry houses are expected to top US$8.47 billion in the third quarter of 2014, increasing 13.4% from the previous quarter, according to Digitimes Research.Optimizing a rebound in orders from chip suppliers for telecom, computer and consumer electronics devices, the top-three foundry houses managed to buck the seasonal trends in the second quarter and ramped up their combined sales by 22% sequentially to US$7.47 billion in the second quarter.In addition to replenishing their inventories, chip vendors including Qualcomm, Broadcom and MediaTek have also started taking pull-in orders for 4G LTE chips in preparation for an anticipated sales boom for 4G smartphones in the second half of 2014, driving up demand for 28nm production capacity at Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC).Due to strong demand from the mobile device sector, TSMC has not only continued to expand its 28nm capacity but has also ushered its 20nm process into volume production in the second quarter of 2014. Meanwhile, UMC has also begun its 28nm PolySiON process in the second quarter, contributing 1% to its total revenues in the quarter.Digitimes Research believes that the ratio of revenues generated by the advanced 28nm and below processes to total revenues of the top-three foundry houses will leap significantly in the third quarter of 2014 as compared to the previous quarter. ASPs will also pick up in the third quarter due to improvements in product mixes.