Although nearly 70 percent of all notebook computers are made in Taiwan or by overseas Taiwanese firms, the industry's failure to widen its dwindling gross margins has become a major headache.
What makes the situation even worse is that some second-tier players like Inventec Co (
Market watchers appeared to have mixed views about whether the margin decline would level out next year.
"We expected to see the margins rebound slowly from the current 4 percent or so to about 6 percent by the end of next year," Simon Yang (楊勝帆), a senior researcher at the Topology Research Institute (拓墣產研), said at an industry forum earlier this week.
Yang said manufacturers' growing realization that lower margins are hurting their R&D capability may suggest that the persistent margin decline could reach its bottom soon.
Signs of steady margins are also likely to surface as Taiwanese manufacturers continue moving their production bases to China, which will help drive down costs while beefing up margins, the Taipei-based analyst added.
Quanta Computer Inc (
Yang forecast that Quanta may begin to see margins steady at 4.8 percent from this quarter until the end of next year, with Compal's expected margin at 5.75 over the same period.
Yang's view was echoed by Ray Chen (
Compal's margins are expected to stay at around 5.7 percent next year, Chen said.
The government-funded Market Intelligence Center (市場情報中心) appeared to be more conservative about the industry's outlook for next year.
"We expect a slower growth of global laptop shipments in light of the weakening replacement demands," said Helen Chiang (江芳韻), a senior analyst with the institute.
Global shipment of notebook computers is expected to increase 18.95 percent to 54.88 million units next year, compared with an increase of 21.87 percent to 46.14 million units this year, according to the institute.
Taiwanese manufacturers shipped a combined 8.8 million notebooks in the June-September quarter, up 18.7 percent from the previous quarter. Shipment in the October-December period is expected to increase 12.3 percent from the previous quarter to reach nearly 10 million units, the institute forecast.
Despite a surge in shipments, the average selling price dwindled to US$653 per laptop in the third quarter from US$656 in the previous quarter, driven by declining key component prices. The institute expects the prices to drop further in this quarter.
"The declining margins may not ease off soon," Chiang said.
Yang and Chiang both warned of the potentially negative impact Inventec's ambitious expansion plan next year could have.