TAIPEI–The two new iPhones — the 4.7-inch iPhone 6 and the 5.5-inch iPhone 6 Plus — will play a crucial role in the earnings growth of Taiwanese integrated circuit packaging and testing services providers, market analysts said Saturday. Advanced Semiconductor Engineering Inc. (ASE), the world’s largest IC packaging and testing firm, is one of those providers. Analysts said that although the fourth quarter is usually a slow season for the global semiconductor industry, ASE is expected to buck the trend, posting higher sales on the back of the new iPhones and strengthening its bottom line.
Project Ara, Google’s development plan for modular smartphones, is expected to become available on the market in 2015 with Quanta Computer reportedly being the main hardware supplier. Orders are expected to boost the Taiwan-based ODM’s non-notebook revenues, according to sources from the upstream supply chain. Quanta declined to comment about its clients or orders.
Sony Mobile Communications, in view of its unsatisfactory smartphone sales performance, has cut its smartphone business personnel by 15% and adjusted operational strategies by focusing on high-end models to seek profitability instead of global market share, and the adjustment is likely to result in gradually decreased orders released to Taiwan-based ODMs, according to Taiwan-based supply chain makers.
White-box vendors shipped 22.3 million tablets globally in the second quarter of 2014, increasing 9.3% sequentially, according to Digitimes Research. Of the shipments, Wi-Fi only models accounted for 56.4% and Wi-Fi plus voice communications models 43.6%, Digitimes Research indicated. In terms of screen size, 7-inch models accounted for 69.4% of the shipments and 7.85/7.9-inch ones 20.8%.
Quanta Computer has announced revenues of NT$77.93 billion (US$2.6 billion) for July, up 8.53% on month and 8.63% on year with combined revenues for the first seven months of 2014 reaching NT$508.27 billion, up 10.48% on year. Quanta shipped 4.2 million notebooks in July, down from 4.3 million units in June. Despite having a notebook shipment drop, the company still managed to achieve a revenue growth in July mainly thanks to a better product mix and contributions from non-notebook product lines, estimated some market watchers, adding that Apple’s increased orders for Mac series products also benefited Quanta’s revenues recently.
Microsoft reportedly has called off a plan to mass produce its small-size Surface Mini tablet because of fierce compeition in the small-size tablet segment, as well as negative responses from its brand vendor clients, according to sources from the upstream supply chain. Microsoft has finished developing the Surface Mini and also completed the product tests; however, mass production did not start as scheduled in May, the sources said, adding Microsoft still paid the costs for the module development and production equipment, the sources said.
Upstream component suppliers such as Intel and hard disc drive (HDD) makers, have started providing support to white-box server players such as Taiwan-based ODMs and the strategy is expected to significantly raise white-box server players’ R&D and cost management ability, according to sources from the upstream supply chain.
While there is an opinion that strong demand for data center servers may maintain for three years at the most and subsequently there will be demand for replacement and maintenance services only, Taiwan-based ODMs generally believe that the demand will continue to grow over the next five years.
Taiwan-based handset ODMs have been purchasing more handset components and parts from the supply chain in China in order to lower their production costs, according to industry sources. The ability of China-based smartphone vendors to roll out models with high price/performance ratios has forced international handset vendors to ask their hardware production partners in Taiwan to seek alternative parts and components to further improve the competitiveness of their products, said the sources.
Some notebook vendors’ shipments are being affected due to lack of panel access as panel makers shift their production capacity to mobile and TV panels. Lenovo, Dell, Acer, Hewlett-Packard (HP) and Asustek Computer are among the vendors who are putting in increased orders for notebook panels and may see shipments affected due to lack of panel supply.
As China’s datacenter market is seeing rapid growth, first-tier server brand vendors such as Hewlett-Packard (HP) and Dell are both aggressively trying to enter the industry. Since most buyers in China prefer local brand vendors for their server procurements, Taiwan server makers are expected to benefit from the business opportunities as China’s server supply chain is still immature.
Taiwan-based handset ODMs and brand vendors are expected to see their combined handset shipments grow over 40% on quarter and also on year to a total of 23.4 million units in the second quarter of 2014, according to Digitimes Research. ODMs, including Arima Communications, Chi Mei Communication Systems (CMCS) and Compal Communications will see their shipments grow 20-35% sequentially each thanks to smartphone orders from Sony Mobile Communications and feature phone orders from Nokia, Digitimes Research said.
Wistron and Inventec will begin ODM production of ARM-architecture servers for Hewlett-Packard (HP) in the second half of 2014, according to Taiwan-based supply chain makers. Some component makers will start shipping products for HP’s ARM-based servers in May. Although ARM solutions are unlikely to become an immediate threat to Intel, the sources believe the extra option should provide clients more leverage to bargain for better prices and more resources from Intel.