Notebook market grows steadily

Taiwanese notebook-computer makers are expecting production to peak in November, despite the fact that they are facing shortages of memory chips and other parts, analysts said.

"In light of strong market demand and an optimistic outlook for holiday season orders, the notebook manufacturing sector is expecting to see steady growth continue to the end of this year," said Stanley Chou (周宏茂), an analyst at KGI Securities Corp (中信證券).

Taiwan, the world's largest notebook supplier, hopes to ship out 24 million notebook PCs this year, a 26 percent jump over last year's 19 million units, Chou added.

Through their production ties with global computer giants, such as Hewlett-Packard Co and Dell Computer Corp, local manufacturers Compal Electronics (仁寶), Quanta Computer (廣達) and smaller rivals are responsible for more than 60 percent of the world's notebook production.

Another industry analyst also foresaw a bright outlook for the sector, saying its visibility is improving.

"At least we know for the next three to four months, notebook makers' sales will stay at a pleasant level," said Grace Chen (陳星嘉), an industry analyst at Insight Pacific (月涵投顧).

"The worst is over," Chen said. She said that during the past two-year slump in demand, international buyers were conservative in placing orders and local notebook makers only made production estimates on a short-term basis.

Taking historical patterns into consideration, this year's notebook production will peak in November to meet the expected surge in demand for the Christmas season, Chen added.

The growing demand for notebook PCs has resulted in a shortage of key components. Both memory-chip and flat-panel display suppliers are reportedly harried in meeting production goals.

Most manufacturers decreased production earlier this year while the economy was sluggish, and must now expand production to meet the swift surge in demand, Chou said.

Computer makers such as HP and Dell have raised contract prices for computer-memory chips this month, and may do so again this week as supplies tighten, Nanya Technology Corp (南亞科技) vice president Charles Kau (高啟全) said.

"The contract guys are requesting more than we can supply," said Kau, adding that Nanya is getting about US$5.20 for the benchmark 256-megabit chip. "Suppliers were not able to make enough money for capital expansion."

Notebook PC makers in the US$53 billion market also face shortages of flat-panel displays because screen suppliers are shifting production to larger panels used in televisions, which make more profit, according to Texas-based market researcher DisplaySearch.

The most widely used displays in notebook computers, which measure 15 inches and 15.4 inches diagonally, are in short supply, said DisplaySearch. Screen-makers in the US$21.4 billion industry, such as AU Optronics Corp (友達), raised profit expectations last week as demand improved.

"Notebook panel prices will continue to rise in September for all sizes," DisplaySearch analyst Wang Chien-erh (王建二) said. "All notebook makers, including multinationals, will be impacted."