Computer Cooler Demand Heats Up

Taiwan makers of thermal-solution products have enjoyed continued sales growth over the past few years as demand for heat-dissipation devices has expanded in unison with the revival seen in the personal computer (PC) market.

Faster and hotter-running processors are increasing the demand for PC cooling devices, according to makers in the line. Intel recently raised the heat-creation bar with the June unveiling of its Prescott central processing unit (CPU), which sucks up 115 watts compared with the 89 to 103 watts consumed by last year's models.

Global shipments of notebook PCs are expected to expand by 18% to 46 million in 2004 and by another 19.6% to 55 million in 2005, according to an estimate by Taiwan's Market Intelligence Center (MIC), under the government-backed Institute for Information Industry.

Global shipments of desktop PCs are expected to reach 120 million to 130 million this year, creating a steady stream of business for thermal-solution providers.


Heat-pipe cooling solutions are also migrating from notebook PCs to desktop computers, replacing traditional heat sinks. The replacement demand is expected to keep the production lines of desktop-PC cooler producers humming through 2005 and beyond.


About 20% of the volume of total global shipments of desktop PCs anticipated for the full year 2004 are expected to have heat-pipe cooler modules, according to makers in the line. The preference for heat-sink replacement is expected to gain momentum in 2005, pushing the ratio of desktops with heat-pipe solutions to 50% of all desktop PCs shipped worldwide within the next two years.


As Taiwan supplies about 70% and 30% of world demand for notebook and desktop PCs, respectively, it comes as little surprise that Taiwan is also a leader in the computer cooling-device market. Several major companies in this line are based in Taiwan, including Asia Vital Components Co., Auras Technology, Chaun Choung Technology, Cheng Home Electric, Foxconn Precision Components, Evercool Thermal, and Thermaltake Technology.


No. 1 Provider of Computer Cooling Devices

With revenues of NT$5.37 billion (US$158 million at US$1:NT$34) in 2003, Asia Vital Components (AVC) is the largest supplier of computer cooling systems in Taiwan.


AVC expects to ship over 38 million desktop PC coolers this year, up from 36 million units in 2003, sealing its market-leading position, according to a company spokesman. In 2003, the company commanded 24% of the global market for desktop PC cooling devices.


At its forecast shipment level, AVC will be the world's largest provider of desktop coolers, accounting for about 30% of the global market share, say other industry insiders.


The sources also noted that AVC and Auras have respectively secured orders to supply cooling devices to Dell for two new series of desktop PCs to be launched early next year. Dell plans to use notebook-type heat-pipe coolers on the new desktop models. However, AVC's spokesman denies the report, citing client confidentiality.


AVC predicted earlier that its revenues would top NT$7.82 billion (US$230 million) this year, up 45.6% from a year earlier. The company is well on track to beat that goal, with revenues growing 59.6% year-on-year to top NT$4.09 billion (US$120 million) in the first seven months of the year, according to a company filing with the Taiwan Stock Exchange (TSE).


AVC is also a major supplier of cooler modules for notebooks, with this year's shipments expected to reach nine million units, or about one million units short of its previous projection due to a delay of Intel's notebook-use Dothan processor, market sources said. The company shipped 6.8 million cooler modules for notebooks in 2003, accounting for 14% of global market share.

Chillin' Notebooks

Auras Technology is expected to ship 12 to 13 million cooler modules in 2004, including 10 to 11 million units for notebook PCs and two million units for desktop PCs, according to Andes Lee, a supervisor of the company.


In 2003, the company shipped eight million cooler modules for notebooks and a small volume of cooler modules for desktops.


Increasing orders from the world's leading notebook PC vendors will contribute to Auras' shipment growth, Lee says. However, Lee also declines to comment on a purported deal with Dell.


With a backlog of orders on hand, Auras expects its shipments to total 20 million units in 2005, including 13 million-14 million units for notebooks and six million units for desktops, according to other sources of the company.


The sharp shipment growth predicted for desktop cooler modules in 2005 is due to new demand for heat pipe coolers from Dell, the sources say.


Auras, which also listed on the TSE, posted revenues of NT$1.12 billion (NT$32.9 million) in the first seven months of this year, up 31.2% from a year earlier, according to the TSE. The company expects its revenues to reach NT$2.5 billion-NT$2.6 billion (US$73.5-76.8 million) by year-end, up at least 44.5% from 2003's NT$1.73 billion (US$51 million).

Growing Fast

Cheng Home Electronic Co., Ltd., a 19-year veteran in the industry, expects its revenues to increase 28% this year to NT$1 billion (US$29.4 million) in 2004, thanks to the introduction of its new thermal solutions supporting Intel's new socket LGA775 Pentium 4 processors and Advanced Micro Devices' (AMD) Athlon 64 lineup, according to the company's export manager Jenny Tseng.


Cheng Home's clients include IBM and Apple Computer of the U.S. and Sony, Sharp, Hitachi, JVC, IBM Japan, and Minolta of Japan. The company also supplies thermal solution products indirectly to Sumitomo Electric Industries of Japan and LG Electronics and Samsung Electronics of South Korea.


A number of Japanese companies are expected to buy from Cheng Home following planned visits to the company in September this year, Tseng says. Taiwan-based notebook makers, including Quanta Computer, Compal Electronics, First International Computer, Wistron and Arima Computer are also clients of the company.


Backed up by its strong R&D capability, Cheng Home is able to develop all kinds of thermal solution products, including DC fans, heat sinks, and CPU coolers for desktops and notebooks, for its clients, Tseng boasts.


Cheng Home's plant in Dongguan, Guangdong Province in China has a production capacity of 2.5 million units a month. To sustain its future growth, the company is building a new plant in Shanghai, which is slated for completion sometimes next year, Tseng says. The Shanghai plant will also have a monthly capacity of 2.5 million units.


However, Cheng Home still keeps its headquarters and R&D center in Taiwan, Tseng says. The R&D center also develops product samples and conducts trial runs of newly developed products.


Time Is Ripe for Heat Pipes

Chaun Choung Technology, which has been in operation since 1973, is a specialized maker of heat sinks and heat pipes, and cooler modules for notebooks. In line with the rising demand for heat pipe coolers for desktops, Chaun Choung also started ramping up the new types of coolers in the second quarter of this year, says company vice president Wu Hui-jan.

Shipments of its heat pipe coolers totaled 500,000 units in July, Wu says, adding that he expects the company's total cooler shipments to top five million units this year, including three million heat pipe coolers and two million heat sink coolers.


The increased shipments of desktop cooler modules has pushed up demand for the company's heat pipes to 3.5 million units this year, or about 1.5 million units higher than Chaun Choung's production capacity of two million pieces, Wu says.


To cope with the rising demand, Chaun Choung is expanding its total production of heat pipes to four million units at its plant in Kunshan, Jiangsu Province in China, Wu notes.

Wu also predicts that the company's shipments of cooler modules for notebooks to surge to 11 million units, up from 7.55 million units in 2003.


Taiwan-based KGI Securities predicts that Chaun Choung will rake in revenues of NT$2.96 billion (US$87 million) in 2004, up 64% from a year earlier.


To maintain its lead in the development of thermal solution technology, Chaun Choung has teamed up with the government-backed Industrial Technology Research Institute (ITRI) to develop high-efficiency vapor chamber and new types of heat plates for servers and other IT products that have limited space to install heat dissipation solutions.


Chaun Choung is expected to start volume production of server-use vapor chambers and heat plates in the fourth quarter of this year, Wu states.

Cooling Down with H2O

Thermaltake Technology is a specialized maker of water-cooling devices for desktop CPUs. With headquarters in Taiwan, the company markets its core products, including coolers, computer cases and power supplies with its own "Thermaltake" brand, according to company financial manager David Su.


The company's new products include its "Big Water" and "SilentTower" water-coolers for Intel's socket 478 Pentium 4 and socket LGA775 Prescott processors as well as AMD's K7 and K8 processors.


The "Big Water" cooler, featuring a layer of 12cm aluminum heat sinks and a 12cm speed-adjustable DC fan, has received an "outstanding partner" award from AMD, Su says.


In order to be fully compatible with all currently available processors, both the "Big Water" and "SilentTower" employ a universal clip mechanism that allow the coolers to be easily installed in computer cases, Su states.


In addition, the uniquely designed fan of its "SilentTower" cooler allows air to be sucked in from several directions to further improve the cooler's heat dissipation efficiency, Su notes. Thermaltake currently rolls out 2,000 Big Water and 4,000 SilentTower units a month. The company plans to ramp up the output of the Big Water to 5,000 units a month by year-end.


In addition, the company also offers an external water-cooling system, the Aquarius III, for a complete lineup of processors from Intel and AMD.


The Aquarius III is a stand-alone product that links externally to the computer case. It can therefore also be used on servers and mini PCs, where space in the case is limited.


An LED front panel on the Aquarius III displays all critical information such as CPU temperature, water temperature and fan speed in real time, according to Su.

Thermaltake expects to generate revenues of about NT$1.8 billion-NT$2 billion (US$53-59 million) this year, compared with NT$1.5 billion (US$44 million) in 2003, Su says.