Laptops

	The S210 from mainland China's Founder has a 12.1in LCD. It runs on Intel Pentium Core Duo T2390 1.86GHz CPU.

High-end laptop models remain strong even as low-cost PCs and UMPCs emerge.

Today’s laptops are taking mobile computing a step higher with the convergence of multimedia, gaming and other high-value features and applications. More focus is given on high-end models, many of which are suitable not just for personal or home use but also for office and enterprise use. On top of more trendy and sleek housing designs, most new products pack Intel’s latest processors, NVIDIA technology, Blu-ray support, DDR3, and high audio and video quality. For enhanced video playback, an increasing number of models are supporting widescreen displays.

Greater China continues to be at the center of this bustling industry. Taiwan, in particular, remains a leader in laptop production and shipments, with its share of global laptop shipment estimated to exceed 90 percent share this year, itself an increase from its 83.55 percent share in 2007. The island’s shipments of laptops continue to rise in response to the surge in demand.

With demand forecast to continue on its uptrend, especially as the switch from desktop PCs to laptops quickens its pace, production and product development among Taiwan and mainland China laptop suppliers will remain on high gear. Taiwan’s Market Intelligence Center (MIC) projects that rising orders from OEMs and ODMs will help secure Taiwan’s dominance in the global laptop manufacturing industry.

The rise of new product breeds will bolster the laptop sector as well. The need for lower-priced laptops to bridge the digital divide has helped stimulate the development of low-cost laptops, which are expected to gain more traction in the coming months. Meanwhile, trends toward the fusion of convergence and miniaturization are fueling the rise of ultra-mobile PCs (UMPCs), mobile Internet devices (MIDs) and netbooks, all of which provide a new user experience and thus help sustain the laptop market.

In spite of the positive market outlook, makers have to brace themselves for even tougher competition and more belt tightening, with the yuan continuing to fluctuate and labor and materials costs on the upturn.

There are currently more than 15 notable laptop makers in Taiwan. Makers involved in OEM work include Quanta Computer lnc., Compal Electronics, Wistron Corp., Inventec Corp., First International Computer Inc. (FIC), Mitac Inc. and Clevo Co. Makers that pursue own-brand manufacturing or OBM include Acer Inc., AsusTek Computer Inc., Micro-Star Int'l Co. Ltd and BenQ Asia Pacific Corp. Acer and AsusTek have established their brands. Leading ODM players in terms of shipment volume are Quanta and Compal.

Most Taiwan makers, particularly those pursuing OEM and ODM business, regard laptops as their core product. Still, a growing number of companies are trying to venture into other products to reduce their dependence on a single product line. Currently, only Wistron has been able to release networking products aside from its computer lines.

Taiwan’s strength as a manufacturing hub for laptops lies in its strong vertical market and mature supply chain. The standardized reference design has also made product design and development less complicated for Taiwan makers, and lowered the entry barrier to many companies. Further, makers in Taiwan benefit from their partnerships with EMS factories in being able to meet any sudden spikes in demand.

The key concerns for Taiwan suppliers are tighter competition and potential oversupply. Competition in Taiwan continues to intensify as more makers gear up to enlarge their share of the market. Production expansion plans as part of this strategy could result in oversupply.

The average production capability of Taiwan laptop makers ranges from 20 million to 30 million units annually. Although companies generally do not fully utilize their production capacity, many makers are planning to expand their capacity to prepare for rising demand.

The transfer of many Taiwan companies’ production to mainland China has made the latter a key production center for laptops. Major Taiwan-owned companies have established facilities in mainland China.

Major locally owned suppliers include Lenovo Group Ltd, Tsinghua Tongfang Co., Hasee Computer Co. Ltd, TCL Corp. and Hedy Holding Co. Ltd. Most laptop suppliers in mainland China outsource production, except for Lenovo, Hasee and Greatwall, which handle some of the processes in-house. Many companies have been focusing on the low-end market to escape the highly competitive high-end sector, and thus concentrate on exporting to developing countries in Southeast Asia, Eastern Europe, South America and Africa.

Only a few makers, such as Lenovo, distribute high-priced business models overseas. Lenovo has made it to the world’s leading suppliers of laptops, according to DisplaySearch, ranking number five with a 7.5 percent share as of Q1 2008.

Suzhou in Jiangsu and Shanghai are the major manufacturing bases for laptops in mainland China, followed by Beijing and Shenzhen, Guangdong. Suzhou and Shanghai serve as base for more than 10 leading laptop vendors and makers, including Quanta, Compal, Wistron, Inventec and Samsung.

Suppliers based in Suzhou and Shanghai can take advantage of Shanghai’s reputation as an import and export center. These companies benefit from lower labor costs and investment environment conducive to high-tech products. The local governments in both areas support high-tech industries with their favorable policies on tax, import and export procedures and infrastructure development.

Meanwhile, Beijing and Shenzhen are becoming core areas for laptop suppliers that produce their own brands. These companies can leverage Beijing’s strong R&D capability and Shenzhen’s mature supply chain for many electronic products.

In the high-end segment, gaming models for enthusiasts remain as top-of-the-line products. The coming months will see more high-end laptops from Taiwan integrating DisplayPort interface and DDR3. Blu-ray ODD adoption rate will also pick up significantly.

Widescreen monitors with 16:9 aspect ratio will slowly enter the mainstream in Taiwan. At present, models with 16:10 aspect ratio prevail. However, 16:9 ratio is increasingly being considered due to the better viewing experience. Laptops with 18.4in, 17.3in, 15.6in, 14in and 13.3in monitors are expected to be available in the future.

Suppliers that target the high-end segment are giving special attention to video and audio quality. For example, the Acer Aspire series highlights Dolby 5.1ch stereo effect and home theater visual experience. The Aspire8920G comes with NVIDIA GeForce 9650M GS GPU.

FIC’s MY040 laptop has a 14.1in LCD and runs on Intel Penryn CPU and integrated graphics. It has two DDR2-667/800 memory modules, supporting up to 4GB capacity.

Top-of-the-line laptops are designed for gaming applications. AsusTek's G71V, for instance, is designed for optimized game play. It uses an Intel Quad Core or Core 2 Duo processor and NVIDIA GeForce 9700M GT GPU. Industrial design is another core product development focus for Greater China suppliers. Many companies are looking for more flexible materials and cost-efficient means to design and make IDs.

One strategy adopted to decrease production cost is the in-mold roller/reprint (IMR) technique for the cover design, particularly of low-cost PCs. IMR allows personalized and fashionable patterns to be easily imprinted onto the laptop cover. IMR technique utilizes a slim plastic film.

Mainland China suppliers offer various laptop configurations to match different buyer requirements. As many companies cater to developing countries that are largely price-sensitive, makers expect 14.1in models and units based on the old Centrino platform to take up a large percentage of production in 2009.

The majority of mainland China makers use the old Centrino platform, although the new Centrino (Montevina) platform, which promises longer battery life and better wireless performance, is winning maker support. Since there are no essential changes in terms of architecture compared with the previous Centrino platform, mainland makers do not expect stepping up to the new platform will require major changes in their processes.

Nevertheless, more mainland China suppliers are launching Centrino 2-based laptops. All interviewed suppliers forecast the new platform will start penetrating the mainstream before the end of this year.

Founder launched two Centrino 2-based models at the same time as Intel’s official release.

In addition to mainstream laptops for home and office use, Taiwan makers are developing products for the low-end and high-end sectors. Buzzwords such as low-cost PCs, UMPCs, MIDs and netbooks are slowly penetrating the low-end laptop sector.

Following the successful launch of AsusTek’s EeePC and boosted by Intel’s Atom processor, major PC makers are joining the bandwagon of low-cost PC suppliers. Low-cost PCs feature smaller form factors and light weight.

UMPCs are likewise gaining traction, even in mainland China. Models from the mainland typically use Intel Atom processors, 945GC chipsets and 8.9in LCDs. Some suppliers also offer units based on Celeron processors.

Most suppliers look to R&D as key to boosting their competitiveness. For instance, Lenovo has established the Lenovo Corporate Research & Development in Beijing, where it has hundreds of engineers, and has a laptop development center in Shanghai. Founder operates an R&D center in Beijing and work together with Peking University. Hasee has an R&D center in Shenzhen.

Besides R&D, makers are also placing heavy emphasis on exports. All interviewed suppliers expressed a rosy outlook for export sales in the face of rising demand for laptops. Mainland China’s Hasee estimated its shipments this year will total 40,000 units a month in 2008, which is a 100 percent increase over 2007. The company expects another 50 percent growth in shipments in 2009.

Founder’s exports have reportedly increased by 120 percent as of September 2008. The company projects another 150 percent rise in exports next year.

Hedy forecasts a 30 percent growth in its overseas sales. The company plans to develop its markets in South America, Eastern Europe and Africa.

Most Taiwan companies have developed long-term relationships with brand makers in their export markets. North America and Western Europe are two of the major export markets for many suppliers. Emerging markets such as BRIC regions are target markets. Many Taiwan companies have overseas branches and/or regional distributors to support their export sales.