After a visit to some of the handset supply chain players in China at the end of 2013, Digitimes Research found that China-based vendors' smartphone shipments in the fourth quarter of 2013 saw a slight growth sequentially, but entry-level models had poor shipment performance, especially those from white-box players in Southern China that mainly sell products to Indonesia and India. These players' combined shipments from September to December 2013 dropped 20-30% on average compared to their volume from July to August.Digitimes Research estimates that most of China's local first-tier and second-tier brand vendors enjoyed sequential shipment growth in the fourth quarter and their shipments were mostly inexpensive entry-level and mid-range models. Their smartphones' screen sizes are also growing larger with most of their mid-range and even mid-range/entry-level models featuring a 4.7- to slightly above 5-inch displays.As for 2014, most supply chain players are conservative about China's smartphone industry and expect around 20-30% on-year growth. China's telecom service providers are advancing to the 4G era and shipments of TD-LTE smartphones are expected to surge in 2014. But a large portion of the growth will come from the replacement of 3G models, especially China Mobile's TD-SCDMA smartphones. This means overall growth in China's smartphone market will be limited.

South Korea's tablet shipments have been dropping after reaching a peak in 2011 due to the rapid appearance of large-size smartphones and phablets, which are gradually replacing consumer demand for tablets in Korea.Samsung Electronics has already caught up with Apple in Korea's tablet market with a share of 45%, higher than the US-based vendor's 44.3%; however, compared to Samsung's share in Korea's smartphone market at around 55-60%, its performance in the tablet market is still rather weak.Observing consumers in Korea's tablet purchasing and usage habits, Digitimes Research found that the priority when purchasing a tablet is convenience, followed by industrial design. As for usage, most Korea consumers purchase a tablet for convenience when searching for information, and entertainment.As large-size smartphones and phablets continue to take demand away, Digitimes Research believes South Korea's tablet market is unlikely to see any improvements in the future unless a killer tablet appears.

According to the statistics from China's Ministry of Industry and Information Technology (MIIT), the number of fixed-line subscribers in China reached 185 million as of the third quarter of 2013, up only by 9% compared to the same quarter a year ago.Neither did the country's Optical Network City project achieve its goal, with the penetration rate of FTTH/O reaching only 18%. Although China has the most FTTH/O subscribers in the world, the number of subscribers increased by only 13 million during the first three quarter of 2013 - a number which is only 10% of the increase in 3G service subscribers during the same period.The development of fixed-line broadband networks has been slow mainly because of a number of reasons, Digitimes Research believes.First, there is a lack of competition, which gives service providers few incentives to improve their service quality, and in turn deters subscribers from upgrading their connectivity.Uneven development in urban and rural areas sees fixed-line broadband service providers showing reluctance in investing in less populated regions outside the more urbanized parts in eastern China.The coming of the 4G mobile era, which sees the country's three major telecom service providers put more of their investments in construction of mobile networks, which can generate faster and better returns. This has prevented investment in fixed-line networks.But the China government is now taking steps to improve the country's fixed-line broadband service development. In December 2013, the MIIT lifted a ban on China Mobile from running fixed-line network business, a move it hopes will heat up competition in the fixed-line network sector.Earlier in August 2013, China's State Council announced its broadband network operation and development goals and in October 2013, the State Council introduced a new program aiming at reforming the China's telecom industry and creating a fair competition environment.

South Korea's Ministry of Knowledge Economy (MKE) will invest in the nation's touch panel industry and has set up a plan that will bump up South Korea's global touch panel market share from 10% in 2012 to 25% by 2015 followed by 35% in 2020, according to Digitimes Research.MKE aims to achieve these goals by increasing South Korea's self-sufficiency for major components and materials from 2% in 2012 to 15% in 2015 and 30% by 2020, including production of PET film and ITO transparent conductive film products. Investments for researching and developing the technologies in addition to equipment will reach about US$100 million.South Korea's government will also invest nearly US$100 million in developing 60-inch and above size EPD multi-touch flexible display technology, said Digitimes Research.MKE is also looking to strengthen relations between its touch panel industry and downstream customers by investing US$22.7 million in medium- to large-size touch panel certification centers in addition to technology training. Digitimes Research believes that in addition to improving South Korea's touch panel market share, the investments will also help vendors in South Korea's supply chains become more integrated and less reliant on outside suppliers.

The global top-five notebook brand vendors and top-three ODMs, after enjoying on-month shipment growths in November, suffered on-month drops of 12% and 11% in December, respectively, better than Digitimes Research's original expectations due to extended orders from both the enterprise and consumer markets, and orders that shifted forward for production in December because of the Lunar New Year holidays.Among first-tier brand vendors, Toshiba and Dell had better performances than the rest in December with Toshiba even enjoying a shipment growth higher than that of November. Dell's shipment growth was mainly contributed by the replacement trend created by Microsoft ending support for Windows XP and the recovery of enterprise notebook demand in the US and Europe, Digitimes Research's figures showed.Meanwhile, education notebook orders from India and year-end holiday sales helped Hewlett-Packard (HP) achieve an on-month decline of only 15% for December, allowing the company to maintain its notebook shipments at above eight million units in the fourth quarter.As for the ODMs, Quanta Computer and Inventec, the major suppliers of HP, both saw over 10% on-month shipment drops in December, while the other ODMs only suffered single-digit percentage decreases.Although Acer's new CEO may not immediately resolve the company's issues, it still shows the company's ambition. Dell, which privatized itself in October 2013, hosted Dell World 2013 in December, displaying its latest product lineups and strategies, and is expected to become more aggressive over the enterprise market in the future.

The year 2013 saw the rise of Ultra HD TVs, larger-size smartphones, increased competition from mobile device makers in China, as well as a decline in the monitor market in addition to many other changes. Looking ahead at 2014, here are some predictions in the technology segment for 2014 that are currently being talked about in the market.1. Apple will release new iPhones sized 4.7- and 5.5-inch to expand its smartphone market. The phones will also have increased resolution that is expected to surpass 400ppi and probably even above 440ppi. However, because Apple doesn't play the low-priced smartphone card, it will lose out on sales in emerging markets, thus making Samsung the number one smartphone vendor in terms of sales in 2014.2. Apple will release an Ultra HD TV rumored to be called iTV. Many people think Apple will only release Ultra HD compatible Apple TV but since consumers will still need an Ultra HD TV to view the content, there is no reason why Apple should not try to bank on the opportunity. Apple is not likely to lose out from other competitors even if its iTV is priced high, as other competitors will also have high pricing for their units. Apple's advantage though will be in its ecosystem, most notably its iTunes services and the way people will be able to view content on their iTV units, so this could drive high sales of the device as well as push up sales in its software business. Apple therefore would be foolish not to cash in on this opportunity, which would also help bring back its edge in innovation, according to many market observers.3. Cloud gaming will increasingly become more popular, with more makers continuing to develop the niche rather than developing consoles. This could lead to a new breakthrough in terms of who produces games and what kinds of platforms are available for gaming, as newcomers in the industry won't have to face hardware competition from Microsoft and Sony etc.4. Detachable notebooks will become more popular. People are realizing that their tablets are not powerful enough to perform functions otherwise done on a PC but yet the consumers will still want the convenience of a portable tablet. Solution? More two-in-one products. Such products already exist but have yet to become popular, as some companies fear that consumers would not like them. However, if companies such as Apple were to develop a detachable notebook, with sizes ranging in the 11- to 13-inch segment, and have both notebook and tablet software functions (in this case Apple would have OS X and iOS available) then that could be a breakthrough in the industry.5. Touch notebooks will continue to stagger. Makers of the devices try to get the best of both tablet and PC functions, but without that detachable screen and more advanced software it will be difficult for the market to expand after a disappointing year in 2013.6. Pricing for hardware such as tablets and smartphones will continue to drop as price competition continues. Therefore, vendors will need to develop more complete ecosystems and more value-added features to entice consumers and maintain profits. More integrated supply chains to keep costs down, will also be necessary, especially amid low-cost competition in China.7. Smart watches will appear more in the market but will see limited growth. Why? Because there is not enough differentiation and added value the devices provide, making them very niche based such as for exercising etc.8. Flexible displays will appear, but won't be that awesome - at least not yet. Korea panel makers are leading the way with this technology and will continue to feature it in upcoming smartphones to be released in 2014. However, because the development of components needed to make the panels bend in half and every which way is coming along slow, consumers will not only have limited access to the technology but will only be able to use the technology in limited ways. However, the start of this technology is based off the idea that one day devices such as tablets will be paper thin and be able to roll like paper so its pretty exciting nevertheless.9. OLED TVs will drop about 10-20% in pricing but will still be priced too high due to production issues, making them hard to compete against 4K TVs.10. Taiwan component supply chains will suffer from increased competition (i.e. lower costs) from China makers but will not have the technological advantages Korea makers possess, particularly in the panel and panel components segments.

Genesis Photonics Inc. (GPI), which has been devoted to developing LED epitaxial wafer and chip technology for over 10 years, has made great strides in flip-chip packaging. GPI has developed MATCH LED and eutectic bonding technology, both of which improve reliability of LED lighting fixtures, allowing them to meet stringent outdoor lighting requirements and reduce production and after-sales costs.Embracing a corporate philosophy that calls for one to "mull the possibilities, seek solutions, and take actions" when faced with problems, GPI has extended from low- to medium-power LED chips to high-power flip-chip devices for nearly three years and has found the doors to Blue-Ocean markets of outdoor LED lighting. In a recent interview, GPI's Package & New Product Division Assistant Vice President Simon Hsu and Product & Marketing Division Section Manager Yang Shih-yi talked about the company's new products and technology, as well as its strategies that are designed around the goal of meeting clients' demand.GPI leads in flip-chip technology among LED makers in Greater ChinaQ: Can you give us a brief introduction to Genesis Photonics' current operations and products?Yang: Genesis Photonics has 35% of consolidated revenues coming from Japan-based clients, the highest proportion among Taiwan-based fellow makers, and 45% from China-based ones. As China's 12th Five-year Plan emphasizes the conservation of resources and environmental protection, infrastructure projects in China are expected to adopt a considerably large number of LED street lamps and tunnel lamps. Therefore, there will be huge demand for outdoor LED lighting in the China market.Flip-chip without wire bonding is a technology for securing high reliability of LED light sources and GPI was the first to start flip-chip LED production among Taiwan- and China-based fellow makers. Outdoor LED lighting products take up a large proportion of GPI's shipments.Flip-chip guarantees quality for outdoor LED lightingQ: How is demand in the outdoor LED lighting market?Hsu: When LED lights are switched on, they are always on, and the only problem is about luminance decay. Outdoor LED lighting is faced with challenging environmental conditions such as high/low temperatures, and high-voltage or high-current operations. When a string of LEDs is run by a constant current, the entire string will go off if one single LED chip fails. This will decrease the service life of LED lighting and even result in failure of the entire lighting system.As 5-year warranty is generally required in the EMC (energy management contract) market, any malfunction during the period may require the support of heavy machinery for repair. The costly maintenance may turn an EMC project into a failure in terms of profitability. Therefore it is necessary to maximize the reliability of LED lights. To enable high reliability, LED players have been keen to develop simplified LED component design. GPI's flip-chip technology is heading towards the same direction.Q: Can you give us a brief idea about GPI's flip-chip LED products?Hsu: Our MATCH LED is a flip-chip packaged on ceramic substrates using eutectic boning process. The MA3 series (MATCH LED in 3535 specification), for example, can reach luminous efficiency of 140lm/W for a single LED chip and features non-wire bonding, close arrays, low thermal resistance and high luminous efficiency, making it ideal for outdoor lighting.Q: Can you explain the flip-chip technology?Hsu: A general flip-chip packaging process involves soldering, bonding and reflow procedures, with reflow attaining 70% bonding coverage. GPI adopts eutectic bonding technology, which is characterized by direct bonding. The technology places an eutectic layer of gold-tin alloy – with thermal conductivity more than 10 times that for silver paste – between the LED chips and substrate, and with ultrasonic lamination technology the two can be firmly and evenly bonded. Such bonding minimizes bubbles and covers over 80% of the substrate. This enables the high reliability of LED chips when operated at high voltages and high currents.Q: What are GPI's advantages over competitors?Hsu: Our MA3 series features non-wire bonding, close arrays, low thermal resistance and high luminous efficiency, thanks to our vertical integration of LED epitaxial wafer, chip, and flip-chip packaging technologies. Based on LM-80 testing, the product life of the MA3-3 is comparable to products offered by leading international vendors. In addition, testing of luminous decay shows that the MA3-3 is well above the Energy Star outdoor lighting standard (94.1%) after working for 6,000 hours at 0.7 ampere and 105 degrees Celsius.High CP ratio creates win-win situation for GPI and clientsQ: What makes GPI a priority choice for clients?Yang: Our flip-chip technology is mature and we have begun volume production. And we are the only Taiwan-based maker whose 0.7 ampere-driven LED chips have been widely adopted for LED street lamps. In terms of cost-performance ratio, the chips generally take up 30% of total cost for high-power LED street lamps. For the same level of luminous efficiency and operating voltage, our MATCH LED is 20% less than competitions in terms of production cost, which will translate into a 6% reduction in the total production cost for lighting fixtures. This can shorten the time for return on investment for EMC projects. To sum up, GPI's competitiveness in the outdoor LED lighting market lies in its high quality, low cost and quick return on investment.Genesis Photonics showcases LED street lamps adopting its flip-chip-packaged high-power MATCH LED at the 2013 Guangzhou International Lighting Exhibition

China touch panel makers are continuing to merge with one another in order to bump up their competition in the market, which has now brought down the number of touch panel makers in China from over 1,000 to roughly 500-600, according to Digitimes Research.The merge is due to strategy purposes and even more so due to economic reasons. O-Film for example was able to gain more funding through merges and as a result has expanded production capacity, improve its technology, drive down costs and bump up its overall business.Digitimes Research expects this trend to continue in 2014 as demand for increased production capacity and lowered costs continue to occur.

At the end of November 2013, MediaTek announced a new near field communication technology called Hotknot, which does not require NFC chips or antennas to work, and the technology has already received supports from China-based Internet players Alibaba and Tencent and will be adopted into the former's Alipay payment system and the latter's WeChat messagig services.The technology, which transmits data through projected capacitive touch panels, was actually developed by China-based touchscreen IC designer Goodix, in which MediaTek holds a major stake.When two projected capacitive touch panels get near each other, they will create a capacitive coupling similar to the one created by fingers and add extra signals to the touch panels' driving line. As a result, when two pieces of touch panels are close to each other, the current changes caused by the capacitive coupling can be detected and the built-in digital signal processors (DSPs) will be able able to sense and filter these extra signals to achieve data transmission purposes.The data-transmission technology only requires two pieces of Hotknot-featured touch panels. But as the technology does not use antennas and has a low transmission power, for two devices using the technology to transmit data, they almost need to directly touch each other and the technology only supports up to 7kbps of transmission speed, far lower than that of the conventional NFC technology.Currently, both Goodix and MediaTek own the patents of the technology, but Goodix has already expressed its willingness to license the patents to others. Several China-based handset vendors have expressed interest in adopting the technology.Because of the technology's low transmission speed and weak transmission range, Digitimes Research believes Hotknot will mainly be used on pairing users' smart devices to save the pairing time needed for a Wi-Fi or Bluetooth transmission. Since the technology is able to pair smart devices in only a short period of time, users do not need to spend time manually looking for the devices they wish to pair, which greatly enhance their usage experience.

As demand for DSCs is waning, brand vendors are turning cautious about releasing new models. In 2013, the top-7 vendors released a total of only 81 DSC models, a sharp drop of over 40% from 2012. Fujifilm, which used to flood the market with multiple models, had a dramatic drop in the number of new models in 2013, while Nikon was the only vendor with an increase.In November-December 2013, only two new DSC models were released: the Olympus Stylus 1 and Fujifilm XQ1. Both of them are mid-range/high-end models featuring high-end specifications such as large apertures in order to differentiate from smartphones cameras, according to Digitimes Research.The Stylus 1 features a constant F2.8 maximum aperture and instead of the usual five-axis sensor-shift image stabilization technology, the stabilization mechanism is in the lens, the first time Olympus has ever adopted such a technology. Because of the new technology, the Stylus costs US$572.The XQ1 has the smallest size among Fujifilm's high-end X series DSC models. It only has a width of 10cm and thickness of 3.33cm. The maximum aperture of the device's wide-angle lens is at F1.8. The device is priced at US$367.