The nation's contract digital camera makers are expected to undergo further consolidation next year as industry leaders such as Sony Corp hesitate to outsource production amid sluggish demand, a private research house said yesterday.
Local manufacturers, who supplied 35 percent of the 47-million-unit global market last year, started to feel the pinch of overcapacity in the first half, said Meg Lin, an analyst with the Institute for the Information Industry (資訊工業策進會), which is based in Taipei.
"Local companies aggressively expanded capacities last year in preparation for a booming 2004, but demand went against most players' expectations," Lin said.
Shrinking demand has encour-aged Sony and Canon Inc, which accounted for about 40 percent of the world camera market, to continue making cameras in-house, she said.
"Without the massive orders, about half of Taiwan's 20 or so companies will be forced out of the market next year, as industry laggards will be unable to eke out profits amid bloody price wars," Lin said.
Lu Chia-lin (
"It is unavoidable to see more mergers or acquisitions as gross margins are squeezed, which is what happened to Taiwan's computer sector over the past few years. But I don't expect the consolidation to be as drastic as Lin predicted," he said.
The research house cut its forecast for local companies' shipments for this year by 6 percent to 22 million units from previous estimates of 23 million.
The researcher predicted that growth would slow by 23.7 percent to 61.36 million worldwide this year, compared with the explosive annual growth rate of 86.2 percent last year.
Local contract manufacturers have been pinning their hopes on orders from Sony and Canon, which would be huge if they could be secured, to boost their global market share past the 40-percent threshold, Lin said.
Although companies are making progress by landing new orders from Japanese vendors, including Olympus Corp and Nikon Corp, the volume would be relatively smaller, she said.
Taiwanese companies are making last-ditch efforts to form strategic alliances to cope with the stiff price war, or are diversifying into the camera-module or photo-printer businesses, Lin said.
Premier Image Technology Corp (普立爾), Taiwan's largest maker of digital cameras, told investors last month that it would tap into the projector and camera-modules markets to ensure growth.
Smaller Chicony Electronics Co Ltd (群光電子) set an example by investing in laggard Skanhex Technology Inc (新虹科技), Lin pointed out.
Premier, which made cameras for Casio, said last month's sales fell 23.53 percent to NT$1.85 billion from NT$2.42 billion a year ago.
Premier shares yesterday closed at NT$29.1 on the Taiwan Stock Exchange, which is 25 percent lower than at the beginning of July.
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