Value-line models driving down ASP of notebook PCs

TAIPEI, TAIWAN: According to MIC (Market Intelligence Center), an ICT industry research institute based in Taipei, Taiwanese notebook PC industry shipment volume is expected to reach 24.1 million units in the first quarter of 2008 and 25.4 million units in the second quarter of 2008.

In the first quarter, even though the shortage of battery cells for notebook PCs is expected to become less acute, thanks to additional production capacity from the existing battery cell suppliers and Korea-based battery cell makers, some notebook PC ODM makers' shipments are still likely to suffer from the battery cell shortage. It is anticipated that the shortage will be resolved in the second quarter of 2008, only after Panasonic battery cell production is fully resumed.

In addition, the turmoil on the US stock market in January resulting from the North American subprime mortgage situation is likely to affect the overall economic performance in emerging markers as well, leading to a slowdown in notebook PC shipments. Consequently, shipments from brand-name vendors will be less than expected. Taiwanese notebook PC shipments are forecasted to witness a sequential decline in the first quarter of 2008.

According to MIC Industry Analyst Nicole Huang, in the fourth quarter of 2007 the Taiwanese notebook PC industry's shipment volume grew steadily. The consumer market saw strong growth in the fourth quarter, stimulating shipments.

In addition to the additional production for battery cells, some brand-name vendors and ODM companies placed orders with Korean battery makers. As a result, the supply of battery cells increased in the fourth quarter. Huang stated that the impact of key component shortages on notebook PC shipments was not as severe as it could have been.

As the notebook PC industry is maturing, Taiwanese ODM companies have embraced price reduction strategies in a bid to increase market share and economies of scale, causing overall notebook PC ASP (Average Selling Price) to fall. Meanwhile, the share of companies adopting AMD Sempron processors was reduced significantly. For example, Toshiba and Dell have reduced their adoption rate of AMD processors.

In the fourth quarter, despite the shipment decline of Intel Celeron CPUs, the adoption rate of Intel's Santa Rosa platform for new and mid-range products continued on the rise, leading to a further increase in the adoption rate of Intel processors in the fourth quarter.

Although the adoption rate of mid-range and high-end CPUs is on an upward course, CPU prices, however, are driven down, as ODM companies are unable to adjust prices due to fiercer competition. In addition, pressured by value-line products, such as the Asus Eee PC and similar products, other leading PC brands have to introduce similar products in order to secure their market presence, leading to further declines in notebook PC ASP.