USB hubs

	The 1082 model from Shenzhen Boyye has four ports and overcurrent protection.

Output of hubs with more ports and functions is rising, while wireless models are unlikely to roll out in the near term.

Even as single-function or pure USB hubs continue to dominate the line in China, some makers are shifting focus to multifunction models, attracted by the latter’s strong potential for profits. Such units boast value-added features or are packaged as part of other products.

This move is spurred by expectations that devices with built-in hubs will grow significantly in number in coming years. More suppliers of computer peripherals are already incorporating hubs in their card readers, laptop cooling pads, USB fans and mouse pads.

The shift, however, is not without challenges. Manufacturers, for one, need to consider the design and practicality of the finished device as not all products can be equipped with hubs.

After releasing its first laptop cooling pad with a built-in USB hub in early 2006, Shenzhen Chaoyisheng Electronic Co. Ltd shelved R&D. This is because laptop cooling pads are becoming more compact, leaving no space for a hub. The supplier nevertheless offers three variations of the design.

The price of the finished product is another key concern. Shenzhen Meizhi Plastics and Electronics Co. Ltd incorporated hubs into USB fans, bringing up prices by a dramatic 70 percent, which naturally dampened market response.

As such, makers will only add USB hubs if the corresponding increase in quotes does not exceed 50 percent.

Despite the pricing debacle, Shenzhen Meizhi’s range of multifunction USB hubs, first released in 2H08, has generally received strong orders. This has encouraged the manufacturer to continue the line, which now also includes cup warmers and phone stands. The company introduced a selection of pure USB hubs two years ago but market uptake was slow.

Most multifunction USB hubs from China target the low end and midrange. Cup warmers are among the models classified under the former. These support USB 1.1 and are shipped to Southeast Asia, Africa and the Middle East.

Midrange units, including laptop cooling pads, commonly have USB 2.0 ports and are exported to Europe, the US and some parts of Asia. Prices generally depend on the type of device and number of ports integrated.

Single-function USB hubs, on the other hand, are designed mainly for the upmarket segments in Europe, Asia and other developed regions. To penetrate destinations with emerging economies and boost margins further, many companies are planning to reduce prices by at least 5 percent.

Midrange pure USB hubs are quoted from $2.50 to $4, while high-end units go for $4 to $5.50. Both types support USB 2.0 and run on Windows 98, 98 SE, 2000, ME and XP, and Mac OS X or higher.

Designs may allow for more than one port. Makers, in fact, are ramping up production of multiport units, confident that demand for such versions will stay strong in coming years. Variants with four ports continue to be the mainstream but companies also expect turnout of seven-port types to grow.

Regardless of the configuration, prices of USB hubs depend on the chipset, which is also the products’ main component. It accounts for as much as 40 percent of outlay for pure models.

Chipsets from Taiwan are the primary choice for both single- and multifunction USB hubs as these are 10 to 20 percent less expensive than other foreign brands. The GL850A model from Genesys Logic, in fact, is currently Ltdthe commonly adopted in the industry. Some companies, however, use chipsets from Japan-based NEC for their midrange and high-end pure USB hubs.

About 85 percent of China’s total output is exported.

Although some companies in China have expressed plans of producing wireless USB hubs as early as 2007, many have backed out and are instead focusing on corded units.

High costs are a key factor hindering expansion but the most critical issue is the supply of Ultra-WideBand chips used for these products.

US-based WiQuest, one of the leading providers of UWB chips, shut down operations last year. Two of the reasons cited were the economic situation and the slow adoption of the technology stemming from concerns over the chips’ unstable performance, power consumption and high cost.

With WiQuest out of the line, the development of UWB technology is expected to slow even further. China companies are putting off plans to produce wireless USB hubs for at least the next three years.

WiQuest’s exit, however, has opened opportunities for other UWB chip providers. Alereon, Pulse Link, Wisair, Realtek and Sigma Designs now have to address performance, design and pricing issues that earlier hounded WiQuest.

Suppliers of USB hubs in China can be categorized into two groups. The first comprises makers that have specialized in the line since their establishment and now focus on single-function units.

The other group consists of companies that began as manufacturers of card readers, laptop cooling pads, and other networking products and computer peripherals. They primarily provide multifunction units.

The supplier base currently includes 200 enterprises, down 20 percent from 2008.

Despite the transfer to more lucrative segments, USB hub manufacture in China remains stable. Output of single-function models in 2009, for instance, is projected to match 2008’s level of 10 million units.

Steady turnout is likewise anticipated in the next few years as the remaining suppliers said they have no plans of exiting the industry as long as it continues to be profitable. This is particularly true for companies with a long history in the line, including Winstars Technology Ltd, which has 10 years of experience in USB hub production.

Companies are keeping capacity at current levels amid forecasts that demand this year for both pure and multifunction models will match that of 2008.

Large and midsize makers of single-function hubs can turn out 50,000 to 60,000 and 30,000 to 50,000 units a month, respectively. The capacity of smaller suppliers is below 30,000. Most enterprises in this segment provide mainly OEM as do manufacturers of multifunction units.

The majority of companies offering the latter category are small and midsize operations with a monthly capacity averaging 10,000 and 25,000 units, respectively.

Most suppliers of USB hubs in China are located in the provinces of Guangdong and Zhejiang.