Aavid and Enlight to battle computer heat
Taiwan-based case maker Enlight yesterday announced an alliance with US-based CPU cooler supplier Aavid Thermal Technologies. The new cooperation will address the growing heat problem in computers as processors run faster and devices get smaller.
Aavid estimated that Intel's Prescott processor, manufactured with a 90nm process, will generate 20% more heat than a current Pentium 4 (P4) chip, made using a 0.13-micron process. Tejas processors, which will be introduced in 2005 and made with a 65nm technology, will generate 50% more heat than a P4. Taiwan's Market Intelligence Center (MIC) estimates that small form factor mini-barebone systems will account for 1.5%, or 1.659 million units, of the forecast 110.6-million-unit desktop shipments this year. The number is likely to exceed two million units next year, following the launches of new models based on Intel's introduction of the Balanced Technology Extended (BTX) form factor specification.
Enlight and Aavid will work together on computer cases designed to more effectively dissipate heat. Enlight chairman and president C.M. Liao estimated that the company can save up to 10% of costs through the alliance
Epson to increase procurement from Taiwan
Seiko Epson expects to increase procurement from Taiwan by about 20% to NT$12 billion in 2004, said Sure Lee, general manager of Epson Industrial (Taiwan). Most of the growth will come in packaging and MFPs (multi-functional peripherals), while PC-related purchases will rise only slightly, he added. Epson established its first international procurement office (IPO) in Taiwan. The company does not have manufacturing facilities in Taiwan, so most of its procurement here involves ODM or OEM orders. In contrast, while Epson's production sites in China also have purchasing authority, most of their procurement is of components. While wafer contract manufacturing figured prominently in Epson's orders to Taiwan in 2002, packaging orders, especially for driver ICs and ASICs (application-specific integrated circuits), are becoming increasingly important and should grow by 30%, said Lee.
Epson is expanding cooperation with Taiwanese companies on photo multi-functional printer production, so related procurement should grow 10%. Epson will let its technical strengths determine what digital home entertainment products it launches. Although several major IT vendors are launching medium-size LCD TVs, Epson does not feel its technology is mature enough, so it will not launch the product or seek a contract manufacturer for the product, according to Niwa Norio, vice president of Seiko Epson. With small-size panel demand increasing rapidly along with mobile phone sales, Epson plans to expand capacity of its MD-TFD (mobile digital thin-film diode) lines in Toyoshina, Nagano Prefecture (Japan) and Suzhou, Jiangsu Province (China) by 20%, Norio said. It will also double its HTPS (high-temperature poly-silicon) LCD capacity in Chitose, Hokkaido Prefecture (Japan), with shipments beginning in 2005. It will wait until its OLED technology is mature before considering developing medium-sized displays.
Toshiba relies on Taiwan OEMs for over 50% of notebooks
more than 50% in 2004, according to Taiwanese notebook manufacturers. In 2002, outsourcing to Taiwan was 20-25% of total. During the first half of this year, Toshiba suffered from price pressure exerted by Hewlett-Packard (HP) in the US and European notebook markets although its sales volume grew by nearly 15% year-on-year. To be price competitive by minimizing production cost, Toshiba originally considered closing one of its factories in Japan and increasing production at its factories in China and the Philippines. However, the overseas factories' cost performance has proven to be not competitive enough.
Therefore, Toshiba has little choice but to decrease self-production by releasing more OEM orders to Taiwanese makers in 2004. Currently, Toshiba has two Taiwanese OEM suppliers, Compal Electronics and Inventec. Balancing the advantages of increased economic scale achieved by concentrating orders with fewer vendors and minimizing risk across multiple vendors, Toshiba is very likely to seek one more Taiwanese supplier, Taiwanese notebook producers indicated. For the third supplier, Toshiba is very interested in Quanta Computer, Taiwan's largest notebook maker.
In 2004, Toshiba expects to sell six million to seven million notebooks in the global market. Based on OEM production of at least 50%, the three Taiwanese makers could obtain combined orders for more than three million notebooks from Toshiba in 2004.
In response to this, Midori Suzuki, a press officer at Toshiba, has written to us indicating that Toshiba is not currently planning to increase the OEM ratio beyond 30% and that the company is continuing to expand production at its overseas sites in China and the Philippines.
Intel to cut chipset prices
Intel, preparing for its upcoming Grantsdale line, will cut 865 series chipset pricing by as much as 6.3% on December 28th.
According to Intel's roadmap, it will launch Grantsdale P and Grantsdale G chipsets supporting the new-generation Socket T (LGA775) Prescott processor in the second quarter of 2004. Since the entry-level Grantsdale GV and Grantsdale GL will not be introduced until the third quarter of next year, Intel has decided to keep the prices of the 845 series flat, with the exception of the 845GE chipset.
DDR demand remerges in the spot market, SDRAM stays weak
Demand for DDR chips in the spot market remerged in early December as DRAM makers stopped dumping inventory into the spot market while SDRAM prices continue to drop, said DRAMeXchange.
Some DRAM maker dumped 256Mbit (32Mbitx8) and 128Mbit (16Mbitx8) DDR chips into the spot market in order to boost monthly sales and hurt the spot prices last week. In addition, a major South Korean maker sold their NAND flash chips with DRAM modules to the DRAM vendors, which then sold the modules below market price into the spot market. Spot prices for 256Mbit DDR 400MHz, 333Mhz and 266MHz chips dropped to below US$4.00.
But the demand for DDR chips have remerged. Traders have restarted building their inventories and module makers began to gain orders from Europe and the US market. The Taipei computer show also helped to support the prices. However, the price may drop soon since contract prices for the first half of December is likely to drop dramatically.
Although DRAM makers' price negotiation with PC OEMs has not been finalized, contract prices for the first half of December is expected to drop 8-9% from the second half of November, according to major DRAM makers. They are losing its negotiation power to the PC OEMs since PC OEMs begin lowering their inventory after the peak season.
Similar to the last term, some DRAM makers offer no premium between DDR400 and 333 as well as between Long-DIMMs and So-DIMMs. This signals the selling pressure do exist in DRAM manufactures. The contract prices has enjoyed wider premium over the spot prices since late-October. With the premium reached US$1 in the end of November, it will not be surprising that the DRAM makers will be pressured to lower the contract prices in order to narrow the price gap.
SDRAM prices continued dropping in the spot market, DRAMeXchange said. 64Mbit (4Mbitx16) SDRAM prices stayed at US$3.10 while 128Mbit (8Mbit x16) ones were traded at US$3.35-3.50.
Dell aims a new model for notebook procurement
Dell and its global notebook contract manufacturers and key component suppliers recently held a rare meeting in Taiwan to form a new production and procurement model that will help reduce the current price-cutting competition among contract makers, according to sources that participated in the meeting. The meeting was presided over by Dell's chief procurement officer and attended by four of its major notebook contract makers - Quanta Computer, Compal Electronics and Wistron of Taiwan and Samsung Electronics of South Korea.
EMS (electronics manufacturing services) suppliers such as Foxconn Electronics (the registered trade name of Hon Hai Precision Industry) and Flextronics of Singapore, and chassis and mold makers Waffer Technology and Catcher Technology of Taiwan and Nypro of the US were also invited to the meeting, said the sources.
Dell expressed its determination to change the rules of engagement with contract manufacturers and component suppliers. Dell made it clear that it will enforce an online bidding system for procurement of key components and oversee delivery of components used in its notebooks to contract manufacturers. The new model in effect removes contract manufacturers from negotiating directly with component suppliers - a practice that gives contract makers an opportunity to squeeze component prices and hide some profits through procurement. With the public bidding system, Dell would increase its control of component suppliers and minimize the hidden profits garnered by notebook contractors, said the sources.
The participation by EMS suppliers in the meeting signals that the cooperation between Dell and Foxconn and Flextronics could move into a new stage. It has been widely reported that global notebook vendors might bypass contract manufacturers and place orders directly to EMS suppliers to streamline production and reduce costs, the sources said, adding that Foxconn and Flextronics could be the future EMS partners for Dell.
Waffer and Catcher are the two largest Taiwanese manufacturers of magnesium alloy cases for notebooks, handsets and other IT products, and their participation signifies that Dell will still count on the alloy for the production of notebooks. Dell was the world's first notebook vendor to introduce magnesium alloy mainframes into notebook production. Although its role at the meeting was unclear, the other attendee, Nypro, is a key supplier of precision plastics injection molds for Dell.
Philips gears up for China's DVD+RW market
Philips is tapping the DVD+RW burner market in China by selecting TCL, China's second-largest maker of TVs and handsets, as its first local development and marketing partner. Having partnered with Taiwanese manufacturers such as BenQ and Quanta Storage , the Dutch giant has begun to pave the way for a more aggressive move into China. Philips has chosen TCL not just for its large manufacturing capability, but also for its marketing subsidiary, TCL Electric Appliances Sales. This operates a nationwide marketing network of 174 sales offices and more than 20,000 affiliated retail stores in China. TCL is preparing production capacity to output two million DVD+RW burners a year, and plans to keep the price per burner to below 5,000 yuan, much lower than the 8,000 yuan currently demanded by Samsung's DVD+RW burner. Currently, Chinese makers of DVD players rely mainly on core components supplied by Taiwanese partners. For DVD burners, Philips and Japanese producers such as Matsushita are already cooperating or plan to cooperate directly with Chinese makers and leave little room for the Taiwanese players.
Taiwan falls behind Korea in TFT panel business
Taiwan is experiencing a widening gap with South Korea in sales of TFT LCD panels as a result of insufficient key component supply and relatively slow progress in fifth-generation (5G) production, according to the Taiwan-based Market Intelligence Center (MIC). Taiwan, which has fallen behind South Korea in TFT LCD panel sales since the fourth quarter of 2002, is estimated to have generated US$2.108 billion in revenues during the third quarter of this year, compared to about US$2.580 billion by South Korea during the same period. The gap in TFT LCD panel operating profits between the two countries has grown even wider - in the third quarter, Taiwan's panel makers are estimated to have generated US$256.7 million in operating profits, compared to US$614.2 million by their competitors in South Korea. With surging capacity of 5G production lines, South Korea surpassed Taiwan to become the top large-size (10.4-inch and above) TFT LCD panel supplier in East Asia since the second quarter of this year.
Compared to Taiwanese panel suppliers, which still heavily rely on component supply from other companies, their South Korean competitors have managed to produce many of the key components by themselves and thus enjoy more stable supply and better profits.
However, there is optimism about Taiwan's panel industry next year, the island will regain the lead in the second or third quarter of next year in both revenues and shipment volumes. With a strong base in fourth-generation and below production lines, Taiwan could easily surpass South Korea after its 5G production picks up, MIC said. Japan, which still accounted for over 20% of large-size TFT LCD panel shipments from East Asia in 2002, is expected to see its share drop to 13.4% this quarter. Sharp was replaced by Taiwan-based AU Optronics (AUO) as the fifth-biggest large-size TFT LCD panel supplier in East Asia in the first quarter of this year, but may regain the title after it starts 6G volume production in 2004.
Acer to battle Dell's direct approach
Taiwan-based Acer said yesterday it will battle Dell and other giant rivals on sales of IT products with a new channel business model that can help Acer garner 40% growth in sales every year for the next few years.
Under the new strategy, Acer aims to boost its sales to US$4.5 billion in 2004, up from US$3.3 billion projected for this year, said sources at Acer. The company's annual revenues are expected to reach US$7 billion in 2005 and US$10 billion in 2006.
Acer will continue to stick with its channel strategy by selling IT products, including desktops, notebooks, monitors and other products through distributors and stores, against the direct approach championed by Dell, said Acer chairman and CEO Stan Shih. Other US giants such as Hewlett-Packard (HP) and IBM are likely to follow Dell's step to expand "direct" marketing in the near future, Shih noted.
Acer's new channel business model aims to distribute the advanced, innovative IT products built on "Empowering Technology" through a friendly, reliable "e-Caring" approach, Shih said. Empowering Technology means to integrate relevant technologies and software for manufacturing IT products and household appliances into a series of brand new products, while "e-Caring" means to offer consumers affordable products and services that meet their requirements, Shih said.
Under the approach, Acer will start marketing a series of digital home entertainment, or information entertainment technology (IET) products, including the Acer Aspire E PC, E Box, E TVD, E Tablet, E 2Go and E Radio, in April 2004.
Thee E TVD is a LCD TV with Internet functionality, the E Box allows users to transmit and receive photos, music and other PC content under a wireless environment, and the E Radio is a smart wireless device that can play music from PC or Internet, and receive Internet radio and AM/FM broadcasts. The E 2Go is portable device that allows users to receive real-time digital content from any place, at any time. All products can be connected to each other, according to Acer sources. With the new sales strategy, Acer aims to boost its sales in the US from this year's projected US$300 million to US$600 million in 2004, US$1.2 billion in 2005 and US$1.8-2.0 billion in 2006, said the sources.
ECS sees 20% mobo and 30% notebook shipment
Elitegroup Computer Systems (ECS) expects its 2004 motherboard shipments to grow 20%, with notebooks increasing 30% on this year, according to company president Ming-Tsun Chen. On the sideline of the company's new product launches yesterday, Chen said that the company will have an additional capacity to pursue OEM/ODM orders next year, as its second China plant recently entered volume production. The new plant, owned by ECS subsidiary E-trend Technology, is located in Shenzhen, Guangdong Province (China). Sitting next to ECS Manufacturing (ECSM), ECS's existing China plant, the E-trend plant will help alleviate some of the manufacturing burdens on the ECSM plant. According to Chen, the new plant can house a maximum of 70 SMT lines with capacity to churn out the equivalent of two million motherboards a month. The company will install 10 SMT lines initially at the new plant to handle motherboard, DeskNote, notebook and mini-barebone system production. ECS has been manufacturing all of its products (motherboards, DeskNotes, notebooks and mini-barebone systems) in the ECSM plant in China. The ECSM plant currently has 70 SMT lines. ECS motherboard shipments are likely to exceed 17 million units this year. It has shipped about 14 million motherboards as of the end of October. With 20% shipment growth, ECS is likely to ship over 20 million motherboards next year. Mike Chou, vice president of product marketing for ECS, said early this month that the combined shipments of own-brand notebooks and DeskNotes would be around 800,000 to 900,000 units this year. The 30% growth would translate into 1.04 million to 1.17 million notebook shipments in 2004.