MIC Predicts Slower Growth For Taiwan's IT Hardware Industry
Jan 16, 2003 Ι Industry In-Focus
Ι Electronics and Computers Ι By Quincy, CENS
The 2002 worldwide production value of Taiwan's information-technology (IT) hardware industry is expected to have grown 11.9% from the previous year to about US$47.85 billion, but single-digit gains are likely to ensue for the coming five years as unit prices fall, according to the Industrial Technology Information Services (IT IS) office under the Ministry of Economic Affairs.
Statistics compiled by the Market Intelligence Center (MIC) of the Institute for Information Industry, which conducts industry studies every year under commission by IT IS, show that growth in 2002 for Taiwan's IT hardware outpaced the 9.4% gain originally predicted for the year but was lower than the readjusted figure of 15.4% announced in mid-2002. The center attributes the lower-than-expected growth rate to the relatively weak business recovery in the second half of the year.
Rising Stars, Falling Prices
Liquid-crystal display (LCD) monitors, optical-disk drives, and notebook PCs were the fastest-growing categories in 2002, enjoying growth of 102.7%, 59.7%, and 28.5%, respectively, in terms of volume compared with the year before.
The MIC predicts that the volume of LCD-monitor production will continue to grow in 2003, by 60% to about 29 million units, but that overall value only rise 30% due to lower unit prices.
A similar seesaw numbers ride occurred with optical disk drives in 2002, with output rising 59.7% by volume but retreating 30.8% by value. The MIC predicts that production of digital versatile disk (DVD) burners will inch up 2% by volume in 2003, though falling by 13.5% by value, stating there are few foreseeable factors that will act to stimulate demand. The center believes that among all IT hardware categories, optical disk drives will see the biggest production drop by value in 2003.
Taiwan shipped about 18.2 million notebook PCs in 2002, worth US$13.9 billion, up 28.5% from the year before. This accounted for 55% of the global supply, making Taiwan the largest supplier of notebook PCs in the world. MIC attributes this growth to a relative increase in contract-production orders from Dell of the United States and Toshiba of Japan, both of which enjoyed high sales growth in the segment in 2002, and predicts that Taiwan will ship about 23 million notebook PCs in 2003, expecting global demand to remain strong.
MIC posits that the global share of Taiwan-made notebooks will grow to about 61% in 2003, though local makers are likely to face strong competition from South Korean rivals, who are fast catching up thanks to their integrated industrial infrastructure. Taiwan's global notebook share, the center predicts, will start to decline in 2004.
Chen Wen-tang, a senior MIC analyst, states that some leading IT makers in South Korea, notably Samsung and LG, have already reached a profitable economy of scale in notebook-PC production, thanks to their aggressive development of both own-brand and contract business.
Digital-camera production, which grew by about 50% in 2001, gained only 10.2% in 2002 due to shortages of charge-coupling devices (CCDs) since the second quarter of the year. CCD supply, however, returned to normal in the fourth quarter, leading to an MIC prediction that domestic output of digital cameras will expand by 23% in 2003.
The production volumes of cathode-ray tube (CRT), or color-display tube (CDT), monitors and desktop PCs saw modest declines of 7.1% and 2.6%, respectively, last year. Production of CRT monitors has been suffering a slow slide in the past few years due to the increasing popularity of LCDs. The production value for this type of product decreased 13.3% in 2002 and MIC predicts a further drop of 5.3% in 2003.
Meanwhile, MIC says the 2002 market value for domestic information services was about NT$143 billion (US$4.1 billion), up 7.1% from NT$133.4 billion (US$3.83 billion) in 2001, but far short of the MIC's original expectation of about 20%.
Still, the center is very optimistic about the prospects for the local information-services hardware market in Taiwan in 2003. It cites as reasons an expected boom in demand for bandwidth as broadband-content services grow, including the provision of Internet-based applications and online learning services, and the government's "Digital Taiwan" project is put into full gear. In addition, integration of the local financial-services industry is expected to greatly increase spending on information infrastructure in Taiwan.
Tipping West
As most of Taiwan's IT and electronic hardware and component makers have moved their production to mainland China, the IT production values generated on both sides of the Taiwan Strait have undergone a structural change.
According to the MIC, the 2002 production value of IT hardware in mainland China was about US$35.2 billion, up 25% from 2001 and nearly double Taiwan's US$17.35 billion (excluding overseas production), which was down 13.8% from the previous year. Mainland China has outpaced Japan to become the world's second-largest IT-hardware producer, though about 60% of the output in the segment comes from Taiwanese companies there.
MIC says that the IT gap between Taiwan and mainland China will expand further as Taiwan IT-hardware makers continue to move production of their higher-end items to mainland China, especially notebook PCs. The center explains that Taiwan-invested companies generated a total of about US$13.9 billion worth of notebook PCs worldwide in 2002, accounting for about 40% of the overall value of Taiwan IT hardware. As more and more local notebook makers are increasing the ratio of notebooks made in mainland China (in 2002 about 40% were delivered from there), the ratio of mainland to local production is certain to rise in the coming years, the center says.
Mainland China's IT-hardware output expanded in 2002, further limiting the space for growth for IT firms in Taiwan and Japan. In 2002, the top five IT-hardware production nations were the United States, mainland China, Japan, Taiwan, and Singapore. Mainland China unseated Taiwan as the industry's No. 3 player in 2000.
In 2000, mainland China's edge over Taiwan in terms of IT production reached about US$2.5 billion, which widened to over US$8 billion and US$17 billion in the following two years. In contrast, Taiwan's domestic IT output fell by 13.8% by value in 2002, and Japan, which saw its IT production value slip by 19.7%.
MIC senior analyst Chen attributes the rapid rise of mainland China's IT sector to the arrival of emigrant Taiwanese companies there, which accounted for about 56% of the overall IT production value in the mainland in 2001 and 64% in 2002. Japanese companies were the second-largest contributor to IT output in the mainland in 2002, the analyst says.
Compared with the mature IT-hardware industry, the relatively young information-appliance (IA) market is expected to enjoy a relatively high growth rate in the coming years, says MIC.
According to IT IS statistics, production of Ias in Taiwan was about US$3.9 billion in 2002, up 124% from the year before, and such solid growth is expected to continue in 2003. Contract production of game consoles will, it is anticipated, account for about 50% of the island's IA production by value in 2003.
Table 2:
Statistics compiled by the Market Intelligence Center (MIC) of the Institute for Information Industry, which conducts industry studies every year under commission by IT IS, show that growth in 2002 for Taiwan's IT hardware outpaced the 9.4% gain originally predicted for the year but was lower than the readjusted figure of 15.4% announced in mid-2002. The center attributes the lower-than-expected growth rate to the relatively weak business recovery in the second half of the year.
Rising Stars, Falling Prices
Liquid-crystal display (LCD) monitors, optical-disk drives, and notebook PCs were the fastest-growing categories in 2002, enjoying growth of 102.7%, 59.7%, and 28.5%, respectively, in terms of volume compared with the year before.
The MIC predicts that the volume of LCD-monitor production will continue to grow in 2003, by 60% to about 29 million units, but that overall value only rise 30% due to lower unit prices.
A similar seesaw numbers ride occurred with optical disk drives in 2002, with output rising 59.7% by volume but retreating 30.8% by value. The MIC predicts that production of digital versatile disk (DVD) burners will inch up 2% by volume in 2003, though falling by 13.5% by value, stating there are few foreseeable factors that will act to stimulate demand. The center believes that among all IT hardware categories, optical disk drives will see the biggest production drop by value in 2003.
Taiwan shipped about 18.2 million notebook PCs in 2002, worth US$13.9 billion, up 28.5% from the year before. This accounted for 55% of the global supply, making Taiwan the largest supplier of notebook PCs in the world. MIC attributes this growth to a relative increase in contract-production orders from Dell of the United States and Toshiba of Japan, both of which enjoyed high sales growth in the segment in 2002, and predicts that Taiwan will ship about 23 million notebook PCs in 2003, expecting global demand to remain strong.
MIC posits that the global share of Taiwan-made notebooks will grow to about 61% in 2003, though local makers are likely to face strong competition from South Korean rivals, who are fast catching up thanks to their integrated industrial infrastructure. Taiwan's global notebook share, the center predicts, will start to decline in 2004.
Chen Wen-tang, a senior MIC analyst, states that some leading IT makers in South Korea, notably Samsung and LG, have already reached a profitable economy of scale in notebook-PC production, thanks to their aggressive development of both own-brand and contract business.
Digital-camera production, which grew by about 50% in 2001, gained only 10.2% in 2002 due to shortages of charge-coupling devices (CCDs) since the second quarter of the year. CCD supply, however, returned to normal in the fourth quarter, leading to an MIC prediction that domestic output of digital cameras will expand by 23% in 2003.
The production volumes of cathode-ray tube (CRT), or color-display tube (CDT), monitors and desktop PCs saw modest declines of 7.1% and 2.6%, respectively, last year. Production of CRT monitors has been suffering a slow slide in the past few years due to the increasing popularity of LCDs. The production value for this type of product decreased 13.3% in 2002 and MIC predicts a further drop of 5.3% in 2003.
Meanwhile, MIC says the 2002 market value for domestic information services was about NT$143 billion (US$4.1 billion), up 7.1% from NT$133.4 billion (US$3.83 billion) in 2001, but far short of the MIC's original expectation of about 20%.
Still, the center is very optimistic about the prospects for the local information-services hardware market in Taiwan in 2003. It cites as reasons an expected boom in demand for bandwidth as broadband-content services grow, including the provision of Internet-based applications and online learning services, and the government's "Digital Taiwan" project is put into full gear. In addition, integration of the local financial-services industry is expected to greatly increase spending on information infrastructure in Taiwan.
Tipping West
As most of Taiwan's IT and electronic hardware and component makers have moved their production to mainland China, the IT production values generated on both sides of the Taiwan Strait have undergone a structural change.
According to the MIC, the 2002 production value of IT hardware in mainland China was about US$35.2 billion, up 25% from 2001 and nearly double Taiwan's US$17.35 billion (excluding overseas production), which was down 13.8% from the previous year. Mainland China has outpaced Japan to become the world's second-largest IT-hardware producer, though about 60% of the output in the segment comes from Taiwanese companies there.
MIC says that the IT gap between Taiwan and mainland China will expand further as Taiwan IT-hardware makers continue to move production of their higher-end items to mainland China, especially notebook PCs. The center explains that Taiwan-invested companies generated a total of about US$13.9 billion worth of notebook PCs worldwide in 2002, accounting for about 40% of the overall value of Taiwan IT hardware. As more and more local notebook makers are increasing the ratio of notebooks made in mainland China (in 2002 about 40% were delivered from there), the ratio of mainland to local production is certain to rise in the coming years, the center says.
Mainland China's IT-hardware output expanded in 2002, further limiting the space for growth for IT firms in Taiwan and Japan. In 2002, the top five IT-hardware production nations were the United States, mainland China, Japan, Taiwan, and Singapore. Mainland China unseated Taiwan as the industry's No. 3 player in 2000.
In 2000, mainland China's edge over Taiwan in terms of IT production reached about US$2.5 billion, which widened to over US$8 billion and US$17 billion in the following two years. In contrast, Taiwan's domestic IT output fell by 13.8% by value in 2002, and Japan, which saw its IT production value slip by 19.7%.
MIC senior analyst Chen attributes the rapid rise of mainland China's IT sector to the arrival of emigrant Taiwanese companies there, which accounted for about 56% of the overall IT production value in the mainland in 2001 and 64% in 2002. Japanese companies were the second-largest contributor to IT output in the mainland in 2002, the analyst says.
Compared with the mature IT-hardware industry, the relatively young information-appliance (IA) market is expected to enjoy a relatively high growth rate in the coming years, says MIC.
According to IT IS statistics, production of Ias in Taiwan was about US$3.9 billion in 2002, up 124% from the year before, and such solid growth is expected to continue in 2003. Contract production of game consoles will, it is anticipated, account for about 50% of the island's IA production by value in 2003.
| Notebook PCs | ||||||
| Desktop PCs | ||||||
| Motherboards | ||||||
| Servers | ||||||
| CRT Monitors | ||||||
| LCD Monitors | ||||||
| Optical Disk Drives | ||||||
| Digital Cameras | ||||||
| Projectors | ||||||
| * Estimate Source: IT IS | ||||||
Unit: US$1 million | |||
| U.S. | |||
| Mainland China | |||
| Japan | |||
| Taiwan | |||
| Singapore | |||
| U.K. | |||
| South Korea | |||
| Source: IT IS | |||
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