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.
Inventec, reporting an average margin of 4.99 percent for the first three quarters of this year, is undertaking massive expansion in Shanghai's Pudong area to boost its monthly capacity to 1 million laptops next year from its current 300,000 units, Yang said.
This could make Inventec "another price destroyer, as the company would also slash prices to strive for more new orders from global vendors," Yang said.
Inventec is expected to ship 4.5 million notebooks next year, up from around 2.8 million this year after the expansion finalizes in the middle of next year. Quanta said it aims to ship 16 million units next year, up from 11 million units this year, while Compal set a target of delivering around 10 million laptops next year from 7.5 million units this year.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to