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Low-cost laptop demand set to rise

Local contract makers for personal computers will experience upside momentum over the medium term as a result of increased demand for low-cost laptops, Fitch Ratings said yesterday.

Shipments are likely to rise substantially next year compared with this year's less than 1 million units, it said.

Kevin Chang (張崇人), associate director in Fitch's Asia-Pacific telecommunications, media and technology team, said Taiwanese contract makers are expected to benefit the most from the new low-cost laptop business.

Various kinds of low-cost laptops -- including Asustek Computer Inc's (華碩電腦) Eee PC, Quanta Computer Inc's (廣達電腦) XO PC (designed for the One Laptop Per Child pro-ject) and Elitegroup Computer Systems Co's (精英電腦) Classmate PC for Intel -- are expected to hit the market in the fourth quarter of the year, priced at under US$300 each.

"Their early participation in exploring this new market segment, strong product design and cost control capabilities, sound relationship with major PC brands and well-established PC supply chain -- chiefly in Taiwan and China -- have led to an overwhelming market share in global notebook PC production," Chang said in a report.

Earlier this month, Asustek lauched the Eee PC as the company banked on the increased mobility demand by consumers.

The company has targeted to ship between 300,000 and 400,000 Eee PCs this year, the Chinese-language online news outlet Cnyes.com reported yesterday, citing Asustek president Jerry Shen (沈振來).

On Oct. 17, Shen said the company expected to ship 200,000 Eee PCs this year.

Unlike the production of conventional laptops and desktops, making low-cost notebooks requires innovative designs to balance the need for low retail prices and sufficient profit margins, Fitch said.

"The ability to manufacture `just in time,' procure key components at reasonable prices and achieve economies of scale from mass production is also essential to ensure cost competitiveness," Fitch said.

Still, Taiwan's mass production capabilities helps distinguish its makers from their counterparts in other countries, edging out rivals.

"Japanese and Korean notebook manufacturers, including Toshiba Corp and Samsung Electronics Co, are likely to maintain their focus on the high-end market, bearing significantly higher average selling prices (ASPs) due to the incorporation of the latest processors, audio-visual and communication features," the report said.

Fitch said demand for low-cost laptops would grow in the emerging markets because of the price factor. But government support for such laptops -- for example through education subsidies -- as well as training and basic infrastructure will be key factors affecting future business growth in emerging markets, the report said.

In addition to emerging markets, developed markets will also see increased demand for full-featured notebook PCs over the medium to long-term as a result of the growing popularity of low-cost laptops, Fitch said.
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