Taipei, Thursday, October 2, 2014 02:37 (GMT+8)
partly cloudy
Taipei
25°C
Digitimes Research: Taiwan ODMs losing out as PC brand vendors turn to China supply chain for tablets
Jim Hsiao, DIGITIMES Research, Taipei [Monday 7 April 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.

Realtime news
  • Percentage of 5.5-inch smartphone panels shipped to China increasing

    Displays | 3h 57min ago

  • Touch panel makers see shipments for thin-film touch panels increase

    Displays | 5h 47min ago

  • Mobile payment company Alliance Digital Tech to come online by year-end 2014

    Before Going to Press | 4h 9min ago

  • Leadtek unveils wearable device for healthcare

    Before Going to Press | 4h 9min ago

  • BLU makers Forhouse, BriView complete merger

    Before Going to Press | 5h 6min ago

  • Japan Patent Office to cut examination process to 5 months

    Before Going to Press | 5h 7min ago

  • Digitimes Research: Spotify to affect Japan Internet music service industry

    Before Going to Press | 5h 15min ago

  • iPhone 6 Plus to account for 60% of total iPhone 6 device shipments

    Before Going to Press | 5h 16min ago

  • Digitimes Research: ARM Mali to become mainstream GPU architecture for China APs in 2H14

    Before Going to Press | 5h 31min ago

  • Quanta Changshu plants preparing for Apple Watch mass production

    Before Going to Press | 6h 3min ago

  • Leadframe maker Jih Lin to post EPS of NT$3 in 2014

    Before Going to Press | 6h 13min ago

  • New Wintel platforms may impact 4Q14 PC demand

    Before Going to Press | 6h 19min ago

  • ARM to set up IoT business unit

    Before Going to Press | 6h 20min ago

  • Taiwan market: Chunghwa Telecom to launch NFC mobile payment services

    Before Going to Press | 6h 38min ago

  • Windows 10 expected to have limited effect on boosting notebook demand

    Before Going to Press | 6h 42min ago

  • Samsung to host Tizen developer conference in China

    Before Going to Press | 6h 46min ago

Pause
 | 
View more
MSI X99S GAMING 9 AC
DIGITIMES Marketing Services
DIGITIMES Translation Services
  • 2014 global high brightness LED market, trends and shipment forecast

    For the global LED lighting market, the market size will reach US$25.82 billion in 2014 or a market penetration rate of 23.4%. This is attributable to exponential shipment growth for light bulbs, tubes, and directional lamps.

  • Greater China touch panel shipment forecast through 2015

    This Special Report provides forecasts through 2015 for Greater China touch panel shipments with breakdowns based on technology (glass, film, resistive), application (smartphone, NB and tablet) and by firm.

  • 2014 global tablet demand forecast

    This report analyzes the main players, their strategies and shipments forecasts for 2014, as well as other factors contributing to either growth or decline in various segments within the tablet market, with a particular focus on Apple, Google, Samsung, and Microsoft, along with whitebox vendors.