| Prime News | | ![]() | ![]() | FPG's Big Ethylene Project in China May Fall Through
Taipei, Oct. 17, 2007 (CENS)--The plan of the Formosa Plastics Group (FPG) to set up a comprehensive ethylene complex in Ningbo of China's Zhejiang province may fall through, as China's National Development and Reform Commission (NDRC), under the State Council, has decided to hand over dominance of the project to a Chinese state enterprise.
A ranking official of the Ninbo city government revealed yesterday (Oct. 16) that the NDRC decided recently that the US$8 billion ethylene project, boasting annual capacity of 1.2 million tons of ethylene, will be dominated by China National Petroleum Corp.(CNPC), at odds with its earlier decision of making it a 50:50 joint venture between CNPC and FPG, as well as FPG's original plan of having 100% ownership of the venture.
The decision represents another major setback for the FPG project, following NDRC's earlier decision to pass over the construction for a mega oil refinery, contained in the project, to Sinopec Zhenhai Refining and Chemical, under the auspices of the Sinopec Group.
"FPG is not interested in undertaking the project in the form of a joint venture," remarked a ranking FPG official yesterday.
The FPG project calls for building a comprehensive petrochemical complex in Ningbo's Beilun petrochemical industrial zone, in an apparent attempt to replicate the success of its petrochemical complex in the Mailiao off-shore industrial zone of Taiwan's Yunlin couty.
Another FPG official discounted the possibility of moving the project to another country, citing disadvantages in material supply, harbor, and integrated production and sale system than conditions owned by China.
Industry insiders, though, noted that the abortion of the ethylene project may jeopardize competitiveness of the intermediate petrochemical plants already erected by the FPG in the Beilun industrial zone at cost of US$2 billion.
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| | ![]() | | | Chinese Central Bank Implies Further Interest Hike
Taipei, Oct. 17, 2007 (CENS)--People's Bank of China will steadfastly carry out its anti-inflation mission in its monetary policy, should the inflationary pressure deteriorate further, said Yi Gang, assistant to the governor of the People's Bank in a seminar in Taipei yesterday (Oct. 16), a statement implying high possibility for further interest hike by the bank by the end of this year, according to local observers.
Yi, a member of the bank's policy-making core, pointed out that annual growth rate of China's CPI (consumer price index) stayed high in September, though slightly lower than 6.5% in August, with the growth rate for the first nine months reaching 4.1% and that for the whole year expected to hit 4.5%. The statement implies CPI growth in the fourth quarter may top 5.5%.
Yi made the remark during his keynote speech delivered during the 13th "Cross-Taiwan Strait Financial Academic Seminar," sponsored jointly by the Chung-Hua Institution for Economic Research and the Taipei Foundation of Finance.
Chang Xiaohui, director of the monetary-policy department of the People's Bank, noted later in the seminar that annual growth rate of September's CPI reached 6.2%, the second highest in 10 years.
Yi attributed China's heavy inflationary pressure partially to long-standing under-priced levels for merchandises, energy, labor, and realty in the past, leading to massive forex influx and thus excessive money supply, which, in turn, have entailed interest hikes and currency appreciation for rectifying the imbalance.
He noted that appreciation of renmimbi is inevitable, which can accelerate industrial upgrading, encourage innovation, and facilitate import, while curbing rapid rise in imported costs of petroleum and other raw materials.
In response to the criticism of the snail's pace for renmibi's appreciation, he pointed out that the People's Bank is following the principle of gradualism in the monetary policy and exchange-rate adjustment, creating deferred, rather than instant, effect.
Yi stressed that renminbi will be appreciated at a steady and balanced pace and won't be dictated by international pressure, while citing the study of a U.S. professor which shows that cheap Chinese imports bring subsidies equivalent to US$40 billion annually to U.S. families, or US$500 per family.
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| | ![]() | | | Compal, Inventec Impacted by Shortfall in NB Battery Supply
Taipei, Oct. 17, 2007 (CENS)--Taiwan's leading contract manufacturers of notebook computers, including Compal Electronics Inc. and Inventec Corp., will be adversely affected by the shortage of battery supply because of a recent fire at the Matsushita plant.
An industry insider predicted the Matsushita plant fire will affect Toshiba Computer the most, which will lead to a procrastinated shipments in the fourth quarter of this year by the Japanese firm's contract manufacturers in Taiwan, including Inventec and Compal.
Nevertheless, both Inventec and Compal said they have consolidated supply chain and will not be affected by the Matsushita plant fire accident. Of them, Inventec stressed it will maintain normal shipments in the fourth quarter as it had set earlier.
Inventec spokesperson Hsu Hsin-chuan stressed his company will not encounter battery-shortage problem in the fourth quarter of this year. But there will be an uncertainty next year.
Over the past several months, supply of some key parts, especially the batteries, for NBs has been very tight. A market analyst said the fire accident will have little impact on U.S. NB brands but will have big impact on Japanese brands, especially on Toshiba.
At present, U.S. computer brands, including Hewlett Packard, Dell and Apple, have diversified procurement of batteries. On the other hand, such Japanese brands as Toshiba, Fujitsu bear the highest risk as they have to outsource batteries. Only Sony Corp. has its own battery plant.
According to a survey conducted by the International Data Corporation (IDC), Toshiba was the world's fifth-largest manufacturer of personal computers by shipping 4.93 million units of PCs in the first half of this year, only behind Hewlett Packard, Dell, Lenovo, and Acer.
A survey made by international institutional investor showed global shipments of notebook computers will have a lower growth rate in the fourth quarter of this year, compared to that of previous years.
Inventec said its shipments of NBs will be concentrated on the second half of this year. The company predicted it would be able to ship between 8.5 million and nine million units of NBs this year.
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| | ![]() | | | Foreign Investors' Overbuys of Securities Totals NT$4.69B. Last Week
Taipei, Oct. 17, 2007 (CENS)--The Taiwan Stock Exchange Corporation (TSEC) recently announced that the securities overbuying position posted by foreign investors amounted to NT$4.69 billion (US$144.3 million at US$1:NT$32.5) during the week of Oct. 8-12, 2007, which represented the difference between NT$131.54 billion (US$4.04 billion) securities bought and NT$126.85 billion (US$3.9 billion) securities sold.
The accumulated net overbought position by foreign investors, during the year to Oct. 12, 2007, was NT$184.39 billion (US$5.67 billion), which represented the difference between NT$5.052 trillion (US$155.44 billion) securities bought and NT$4.867 trillion (US$149.75 billion) securities sold.
The TSEC noted the market capitalization of the shareholdings of foreign investors totaled NT$7.791 trillion (US$239.72 billion) as of Oct. 12, 2007, or 33.69% of the total market capitalization. This was NT$116.72 billion (US$3.59 billion) lower than that posted a week ago.
The three stocks that registered the highest overbought positions by foreign investors during the week of Oct. 8-12, 2007 were: HannStar Display (67,989 thousand shares), Taiwan Cement (52,014 thousand shares), and Yuanta Financial Holdings (40,399 thousand shares).
The three stocks that posted the highest oversold positions by foreign investors during the same week were: United Microelectronics (69,213 thousand shares), Shin Kong Financial Holdings (60,167 thousand shares), and AU Optronics (54,225 thousand shares).
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| | ![]() | | | Sino-American Wins Big Order From Suntech Power
Taipei, Oct. 17, 2007 (CENS)--Mainland Chinese solar-module maker Suntech Power Holdings Co., Ltd has set up "a good cooperative tie with Sino-American Silicon Products Inc. and booked part of Sino-American's crystal growth capacity," according to Suntech's executives.
Taiwanese industry watchers estimated the contract at hundreds of millions of U.S. dollar, a volume huge enough to boost Sino-American's monthly revenue to NT$1 billion (US$30 million at US$1:NT$33). Some said the contract is a big boost for Sino-American and unveils new model of the cooperation between front-end and back-end of the photovoltaic industry across the Taiwan Strait.
Suntech is reported to have secured tons of orders and be in urgent need of crystal-growth capacity. Sino-American has reportedly strived for Suntech's outsourcing contracts. However, Sino-American has kept silent about comments on its tie with Suntech.
Suntech singed a contract with MEMC last year to buy US$5-6 billion worth of polycrystalline silicon from the U.S. photovoltaic-material suppler over the next 10 years. Also, it inked a contact to buy US$678 million of polycrystalline silicon from Hoku of the United States.
All these materials need to be preliminarily processed at manufacturers like Sino-American before they are built into Suntech's modules.
Suntech's vice president, Guang-chun Zhang, disclosed the contract at a recent photovoltaic forum held in Taipei. He said the outsourcing volume is considerable and cooperation between the two companies will escalate. Put aside, Suntech has also set up cooperation with Green Energy Technology Inc., which is held by Taiwanese household-appliance maker Tatung Corp.
Sino-American reported after-tax net income of NT$769 million (US$23 million) for the first half this year, up 146% year-over-year. In the third quarter, the company's photovoltaic business posted gross margin of around 35%, making it the best margin performer of Taiwan's photovoltaic industry.
As of the end of September, Sino-American's gross margin has recorded another new high for 26 consecutive months. Industry watchers estimated the company's production capacity utilization rate will stay high partly because of Suntech's order.
Sino-American is boosting capacity to deal with the big order. It projects to increase the capacity to 130 megawatts by the end of this year, around six months earlier than projected. Industry watchers estimated the company's revenue from photovoltaic business will approach NT$900 million (US$27 million) a month once its capacity begins running at full rate after the expansion is competed. Revenue from chip-making business will likely help swell monthly revenue to NT$1 billion (US$30 million).
Some institutional investors pointed out Sino-American owns some certain advantages in the photovoltaic industry. They said the company has sold 80% of its capacity and will likely see its earnings per share increase 81% this year from last year. Macquarie Securities has rated the company as "better-than-average" performer and set target price for the company at NT$372 (US$11).
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| | ![]() | | | Neo Solar Lands Big Order From European Solar Module Heavyweight
Taipei, Oct. 17, 2007 (CENS)--Taiwanese solar-cell maker Neo Solar Power Corp. recently signed a contract to supply European solar module maker Scheuten Solar nearly NT$5 billion (US$151 million at US$1:NT$33) worth of cells over the next three years beginning in 2008.
The Taiwanese company expects the contract to help boost its revenue for this quarter and revenue for next year.
The Netherlands-headquartered Scheuten is the oldest solar-energy company in Europe, founded in 1950. The company's chairman, Jacques Scheuten, and chief executive officer (CEO), Leon Giesen, visited their counterparts at Neo Solar on Oct. 9 to congratulate on the company's initial public offering and signed the contract.
Scheuten now operates branches in Germany, Belgium, Spain, Italy, France, and South Korea.
Neo Solar executives pointed out that the latest contract is the most significant one in terms of value although it signed another supply contract last year. The two contracts are valued at over NT$5 billion.
Taiwanese industry watchers pointed out that Neo Solar's winning of the contract represents its technological and manufacturing capability has convinced Scheuten. Its manufacturing has been recognized as quality as first-tier manufacturer Q-Cells of Germany. Recently, Neo Solar has unveiled a high-performance technology, codenamed "Super Cell," which claims a shining photovoltaic conversion ratio of over 16%. Currently, average conversion ratio is 15.4% on polycrystalline-based cells.
Neo Solar began volume production late last year with a line capable of turning out 30 megawatts of cells a year. To cope with added orders, the company is installing a second production line, which is scheduled to enter mass production next month. In addition, the company plans to set up one line by the end of this year and plans to move this line into commercial production early next year. Output will triple after the two new lines enter into production.
The solar cell maker mulls to swell output to 210 megawatts at the end of next year and further to at least 570 megawatts by 2011, ranking it among the world's top three solar cell makers.
Neo Solar has set many records in the solar-cell industry worldwide since beginning volume production in the fourth quarter last year. For instance, it entered into full-capacity production in shortest period of time after beginning volume production. Also, it began making money in the first quarter of operation.
In September, its capacity utilization rate hit a staggering 120% mostly thanks to strong add-on orders from customers. In the third quarter alone, the company had revenue of NT$1 billion (US$30 million) and saw earnings rise sharply. Throughout the first three quarters this year, the company netted NT$3.5 per share on total revenue of NT$2.3 billion (US$69 million). It sets to make NT$5 throughout this year.
In spite of recent reports that Neo Solar's major supplier of polycrystalline silicon, LDK Solar, had some accounting problems, which may affect its shipments, Neo Solar executives said their company has secured sufficient material sources at least until 2009 and will carry on capacity expansions as scheduled.
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| | ![]() | | | Samsung Reportedly to Procure Cellphone PCBs From Taiwan
Taipei, Oct. 17, 2007 (CENS)--Samsung of South Korea, a major global cellphone brand, is expected to soon release cellphone printed circuit board (PCB) orders to Taiwanese suppliers, and the Korean brand's cellphone-board outsourcing rate is expected to reach about 20% in the future, according to industry sources.
Samsung is expected to place cellphone PCB orders with local companies such as World Wiser Electronics Inc., Compeq Manufacturing Co., Ltd., and Unitech Printed Circuit Board Corp., the sources said.
Samsung changed its policy in late second quarter to start outsourcing cellphone boards. In the past few months, the Korean firm has sent officials to contact some Taiwanese PCB makers and visit their production facilities in mainland China.
Among the candidate suppliers, Unitech reportedly has begun monthly small-batch shipments, while World Wiser and Compeq are expected to be certified in November, by Samsung, which is expected to place orders in December.
All the said Taiwan companies refused to confirm the report.
After it replaced Motorola as the world's No. 2 cellphone brand in the second quarter this year, industry sources said, Samsung is actively trying to further expand its market share and increase shipments in some third-world nations such as mainland China, India etc. but the firm's in-house capacity would not be sufficient to support the rapid expansion. In addition, they added, Samsung never outsourced its cellphone PCBs before, compared with Motorola and Sony Ericsson that outsource at least 40% to 50% of such key parts, so the urgent thing is to cut costs for higher competitiveness.
After Samsung places orders with Taiwan cellphone-PCB suppliers, Taiwan will become a major outsourcing citadel of the world's top-four cellphone brands. Nokia, currently the world's No. 1 cellphone brand with a global market share of 37%, outsources about 40% of its needed cellphone PCBs from Taiwan suppliers. Motorola is the most active procurer of its kind from Taiwan suppliers by outsourcing over 60% of the cellphone boards, though the brand's shipmentsthis year have been not so smooth. Sony Ericsson, with an about 10% global share, currently procures about 30% of the PCBs from Taiwanese companies and the rate is expected to continue increasing.
Samsung currently owns a global market share of 13% to 14%, which is expected to increase to outstrip 15% in the future. Industry sources said that if Samsung procures about 20% of the cellphone PCBs for its annual shipment volume of 140 million to 180 million units from Taiwan, the ordered volume is already enough for keeping a cellphone PCB plant.
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| | ![]() | | | LPL's 8G Project Fuel Investments by Taiwanese TFT-LCD Makers
Taipei, Oct. 17, 2007 (CENS)--LG.Philips LCD Co., Ltd. (LPL) of South Korea's recent announcement to invest 2.7 trillion Korean Won (US$1 equates to 914 Korean Won) to build an eighth-generation (8G) thin film transistor-liquid crystal display (TFT-LCD) panel plant is expected to prompt major Taiwan counterparts to upgrade their investments, according to industry sources.
LPL's president and CEO Young Soo Kwon recently unveiled a plan to set up the new 8G plant with a monthly capacity of 83,000 substrates, which would be used to cut into mainly 47- and 52-inch LCD TV panels. LPL's 8G plant is scheduled to start production in the first half of 2009. Some equipment suppliers pointed out that LPL in fact has completed construction of the new facility but has not released its orders for manufacturing equipment.
Some analysts of European-based institutional investors said that the 8G project is a necessity of LPL because the firm tries to compete with major rivals such as Samsung, Sony, and Sharp. The investors warned that the aggressive capacity expansions of major panel makers are expected to throw a new variable into future's TFT-LCD industry competitions and market conditions, because of the foreseeable overcapacity.
They predicted that the global TFT-LCD market would step into another cycle of overcapacity in 2009, after seeing favorable business climate in 2007 and 2008.
According to past experiences, said a senior analyst of WitsView Technology Corp., a LCD market research firm, companies who pioneered new-generation panel production were not necessarily good. The LPL, for example, which set up the world's first 7.5G panel plant, suffered record loss in 2006 due to high equipment depreciation and sales pressures.
The senior analyst stressed that substrates produced by 8G panel plant will be mainly cut into 46/47- and 52-inch TV panels, but currently the market mainstream sizes are 32, 37, and 42 inches, while the over-46-inch sector is relatively small. So, he added, the popularity of over-46-inch LCD TVs would be a deciding factor for the speed of panel manufacturers to finalize their 8G investment projects.
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| | ![]() | | | Taiwan's Land Value Tax Revenue Hits 4-Year Low of NT$4.7 B. in September
Taipei, Oct. 17, 2007 (CENS)--Taiwan's land value increment tax revenue hit a four-year low of NT$4.7 billion (US$142.42 million at US$1 = NT$33) in September, tumbling by NT$1.5 billion (US$45.45 million) or 24.3% from the corresponding figure of last year; while the securities trading tax revenue posted a whopping rise of NT$3.4 billion (US$103.03 million) or 57.7% to reach NT$9.4 billion (US$284.85 million), according to the statistics released by Ministry of Finance (MOF).
MOF officials attributed the opposing trend in tax revenues for the said two items to the recent polarized performances of stock and real estate markets. They believed that the U.S. sub-prime mortgage storm did impact Taiwan's real estate market as financial institutions on the island have tightened up credits to housing loan applicants.
In September Taiwan had a total of 18 securities trading days with entire transaction value of NT$2.47 trillion (US$74.85 billion), translating into an average of NT$137.4 billion (US$4.16 billion) per day. The robust securities trading generated harvest securities trading tax revenue.
In the same month, the total tax revenues collected by the government amounted to NT$185.1 billion (US$5.61 billion), up NT$14.1 billion (US$427.27 million) or 8.3% from the corresponding figure of last year. Of which, income tax revenue accounted for NT$96.1 billion (US$2.91 billion), with business income tax revenue increasing by NT$15.3 billion (US$463.64 million) to NT$62.97 billion (US$1.91 billion) and personal consolidated income tax revenue chalking up by NT$16.9 billion (US$512.12 million) or 21.4% to NT$33.13 billion (US$1 billion).
In the first nine months of the year, the island's total tax revenues accumulated to NT$1.353 trillion (US$41 billion), reaching 84% of the full-year goal. Of which, the central government commanded a sizable share of NT$961.9 billion (US$29.15 billion) and local governments made up of the remaining NT$353.7 billion (US$10.72 billion). The former posted annual rise of 10.3% or NT$89.9 billion (US$2.72 billion), accomplishing 86.5% of the target; and the latter increased by NT$10.8 billion (US$327.27 million) or 3.2%, accomplishing 77.8%.
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| | ![]() | | | Taiwan's CPI Growth Hits 23-Month High of 3.08% in September
Taipei, Oct. 17, 2007 (CENS)--Taiwan's consumer price index (CPI) posted an annual growth of 3.08% to reach 107.38 in September, the highest of its kind in 23 months, according to the statistics released by the Cabinet-level Directorate General Budget, Accounting and Statistics (DGBAS).
DGBAS attributed the sharp rise of CPI to the influence of typhoons and the price hikes of oil and raw materials in the international market. In August this year the island was struck by three typhoons, which severely damaged agricultural output resulting in total loss of NT$2.3 billion (US$69.69 million at US$1 = NT$33) for the sector. The damage diminished the supply of agricultural produce, and the prices of vegetables shot up by 32.63% in September as a result.
In the same month, the core CPI, excluding the prices for fresh vegetables, fruits and fish as well as energy, sharply rose by 1.94%, the largest growth of its kind since March of 2002.
DGBAS indicated that the continuing price hike of international oil and raw materials has helped boost Taiwan's wholesale price index (WPI), which has posted an upward trend since the beginning of last year. In September of this year, Taiwan's WPI recorded an annual rise of 4.63%, with the food price jumping by 7.72%. During the month, the annual growth of import prices posted at 7.98% and, among the imported items, the prices of corn, soybean, coal, crude oil, steel, nickel, and lead remained at a high level.
In the first nine months of the year, the wholesale prices of medium products chalked up by 8.94%, much higher than the corresponding 0.92% posted by the finished products. However, in September alone, the said two percentages stood at 4.46% and 2.37%, respectively. In the same month, the non-durable consumer products, including water, electricity, gas, medicines, and food, climbed up by 6.14%, the largest monthly rise of its kind since November of 2005.
Insiders pointed out that the increasing demand for food among the emerging economies such as China, India, and some Southeast Asian nations has led to the soaring demand for soybeans, corns, and wheat, and therefore helped boost the prices of such commodities. They foresaw a higher CPI growth in October than in September since broad price hikes recently seen in various kinds of food products, including cooking oil, flour, soybean source, instant noodle, steamed buns, soybean milk, etc.
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| | ![]() | | | Handset Maker Qisda Turns Profitable in First 3 Quarters
Taipei, Oct. 17, 2007 (CENS)--Infused with nearly NT$5 billion sales from non-core business over the past three quarters of this year, Qisda Corporation, a spin-off company of Taiwan's BenQ Corporation, is poised to challenge net earnings per share (EPS) of NT$1 per share in the quarter, turning profitable for the first time after terminating partner relationship with Germany's Siemens, according to company sources.
Furthermore, with upcoming orders from Britain Telecom and Korea's LG, respectively, for mobile phones and liquid crystal display (LCD) TVs in the fourth quarter of the year, Qisda is poised to embrace a promising future, according to institutional investors.
Since being split from BenQ at the beginning of this September, Qsida has been specialized in production for outsourcing companies, while BenQ has focused on branding operations.
In fact, Qisda is still plagued by deficits in its core business operations, with a loss estimated at NT$2.1 billion for the second quarter. However, thanks to NT$5 billion sales from non-core business for the third quarter, the company has smoothly turned profitable.
Institutional investors project that Qisda's profits in the third quarter could offset a loss of NT$1.2 billion for the first half of this year.
Qisda has landed additional orders for the fourth quarter, including an order from Britain Telecom for E72 series smartphone, which is Britain Telecom's first model procured from Qisda for promotion of its unlicensed mobile access (UMA) service.
Also, Qisda already won orders from LG for 500,000 LCD TVs a year, and is seeking to sign another supply contract for one million units. Noteworthy is that AU Optronics Corp. (AUO), affiliated with Qisda and a world-level supplier of display panels, can back the latter to vie for orders more competitively.
Hsung Hui, president of Qisda, is also AUO's vice president in charge of business with Japanese and Korean clients of AUO. He emphasized that AUO will help Qisda to diversify its product lines by sharing production with the latter for LCD TVs, LCD screens and LCD modules in particular.
Qisda reported sales revenue of NT$10.8 billion for September, declining from NT$13 billion posted in August, as the company started to exclude sales of branded products from its revenue in the month.
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| | ![]() | | | D-Link Eyes No. 1 Brand for 11n-based Network Devices
Taipei, Oct. 17, 2007 (CENS)--Working closely with its contract supplier CAMEO Communications Inc. to explore business opportunity for 802.11n technology, the Taiwan-based D-Link Corporation, one of world's top three brands of network devices, managed to score shipment of 700,000 units of 11n-based AP routers in the third quarter of the year, likely to become No.1 brand for 11n-based products in the world, according to company sources.
The world's top three brands of network devices, namely D-Link, Linksys and Netgear, together command about 60% of the retail market for wireless local area network (WLAN) products, with Linksys leading the market. However, D-Link has smoothly obtained a 30% share of the market for 11n-based AP routers in the third quarter.
Taiwan's major suppliers of WLAN devices include Gemtek Technology Co., Ltd., CyberTAN Technology Inc., CAMEO and SerComm Corporation, which collectively command a share of more than 90% in terms of shipment in the world.
Since the second quarter this year, D-Link has cooperated with CAMEO to tap the market for 11n-based products by price-cutting promotion, and successfully recorded single-quarter shipment of over 700,000 units in the third quarter, sharply up from between 500,000 to 600,000 units posted in the first half of this year.
At present, CAMEO maintains its single-month revenue at a level of NT$1.1-1.2 billion, with 11n-based products contributing about NT$600 million. As CAMEO's shipment of 802.11g-technology-based products is gradually declining, the company, with a boom coming in the fourth quarter, is expected to see a proportion of 11n-based devices exceed 50% of its total sales, and shipment of the products exceed one million units in the fourth quarter.
Linksys leads the retail market for 11g-based WLAN devices by a share of between 25% and 26%, and D-Link about 19%. But, by sparking a price competition in the second half of this year, D-Link has smoothly introduced 11n-based devices into the market, and once enjoyed banner sales during the back-to-school season. The firm projects its share of the market for 11n products to break 20% in the period, and already aims for No. 1 brand in the retail market for WLAN devices.
Institutional investors noted that the world's top three brands, which have focused on the North American market for a long time, have also sensed burgeoning demand for new WLAN technologies in Europe, Asia and other emerging markets this year. Compared with Linksys and Netgear, which have both heavily concentrated on the North American market, D-Link has extended its footholds in the markets of North America, Europe and Asia, and therefore reported shining sales performance in the world's retail market.
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| | ![]() | | | High Time for Low-priced Laptops
Budget-priced notebook computers are the hot topic in the personal computer (PC) market in the second half of this year, with three major new models---the XO, Classmate PC and EeePC--hitting the global market.
The XO, also known as the "US$100 laptop," is developed by Quanta Computer Inc. and the Massachusetts Institute of Technology's One Laptop Per Child (OLPC) association. The model is designed as an educational tool for use in underdeveloped countries.
Competing with the XO are the Classmate PC, designed by Intel and produced by Taiwan's Elitegroup Computer Systems Co., and the EeePC, manufactured by ASUSTeK Computer Inc.
All three models sell for between US$200 and US$300, or about a tenth of what general notebook PCs commanded about a decade ago, when most large international PC brands continued to do most of their own production in house.
At the price range of US$200 to US$300, notebook PCs are now within the means of many people who could previously afford them. The budget models are also compact, lightweight and have built in Internet and Internet telephony functionality, such as Skype, as well as audio and video. Insiders expect the new breed of notebooks will improve educational opportunities in emerging countries.
In fact, notebook PC brands had largely ignored the potential of the low-price market until the non-profit OLPC association kick-started the interest with the development of its XO in 2005. At the time, the concept was widely regarded infeasible among and some, including Intel's chairman Craig R. Barrett, thought consumers in emerging countries wanted models with higher performance rather than lower price.
How times have changed. Now Intel is launching the Classmate PCs to take a leading position in the low-price laptop market, and it recently announced it would join the OLPC project. Market analysts said that Intel's move should spur a notebook PC boom in the fourth quarter of this year or the first quarter of 2008.
Boon to Taiwan's PC Makers
As low-priced laptops gain popularity, the biggest winners are likely to be Taiwan's cost-competitive PC makers, who are likely to land new orders for contract production the budget notebook models. In fact they already produce most of the XO, EeePC and Classmate PC models.
The OLPC association inked an exclusive contract with Quanta to supply the XO. About 93% of the key components in the XO are supplied by Taiwanese makers, including the liquid crystal display (LCD) panels (supplied by Chi Mei Optoelectronics Corp.), keyboards (Sunrex Technology Corp.), integrated circuits (ICs) for keyboards (ENE Technology Inc.), battery packs (Simplo Technology Co., Ltd.), power management controlling ICs (Global Mixed-mode Technology Inc.) and cases (Hon Hai Precision Industry Co., Ltd.).
ASUS's EeePC is also largely made with Taiwanese components, including ICs for keyboards and USB card readers supplied by ENE Technology, passive components (Walsin Technology Corp. and Honey Hope Honesty Enterprise Co., Ltd.), and battery packs (Celxpert Energy Corp.). Hon Hai Group is also vying for orders from ASUS.
Mary Lou Jepsen, chief technology officer of the OLPC, recently noted in Taiwan that one billion children worldwide will trigger huge demand for low-priced laptops, and production capacity is expected to reach 10 million units of the XO per month in two years. Twenty-five countries have expressed strong interest in XO, and seven intend to procure the budget laptops.
ASUS is also quite optimistic about shipment of its EeePCs. Jerry Shen, president of ASUS's open optimum platform business, estimated conservatively the shipment to reach 300,000 units this year, and sharply increase to more than three million units next year. Elitegroup, who is to deliver Intel's Classmate PCs, also projected its shipment of the products to amount to 300,000 units this year.
These optimistic projections are lent credence by the growing popularity of notebook PCs in general relative to desktop PCs. In some markets, such as Japan and Europe, notebook PCs already outsell their desktop counterparts. Globally, the notebook PC market is growing by about 20% a year, compared with nearly zero growth in the desktop market.
Specifications of 3 Major Low-price Laptops
Intel got off to an early start to launch its Classmate PC in June; ASUS is scheduled to have its EeePC on sale in October; and the OLPC has postponed the launch of its XO to November from October.
The OLPC association is aiming to trim the unit price of the XO down to US$100, but the high cost of components and parts has left it about US$90 too dear.
Jepsen originally said in Taiwan that the XO would sell for US$175 this year and hopefully drop to US$100 in 2009. However, the OLPC association reported the latest selling price of the XO will be US$188 per unit, which has led some countries to delay plans to procure the notebook PC.
The EeePC will sell for US$199, US$249 or US$299, depending on configuration, while Intel's Classmate PC will be priced at US$400. In short, OLPC's XO is still the cheapest name in the game.
For its US$188 price tag, the XO is designed to meet the needs of underdeveloped countries. It has an AMD LX-700-X86 central processing unit, 256Mb DRAM, 1GB flash memory and Linux operating system suitable for typing, painting and audio compositing.
The XO also has a reinforced, shock-resistant case and dual-mode display panel. The panel, developed by Taiwan-based Chi Mei Group's Chi Lin Technology Co., can switch between a transmissive, full-color mode, and a reflective, high-resolution mode that is sunlight readable.
Furthermore, the XO is a serious power miser. It can run on 2W, or about a tenth of the 20-30W sucked up by a general notebook PC. The machine can easily be recharged by a hand crank or solar panel, so it can be used even in areas without electricity.
ASUS's machine, by comparison, is aimed at developed countries. The EeePC has built-in WiFi and Skype and features a 300,000-pixel webcam, seven-inch thin-film-transistor (TFT) LCD panel and a 4-16GB solid state disk (SSD) drive.
Intel's Classmate PC, the first to hit the market, weighs 1.3kg and has a seven-inch screen, Celeron processor, a 915GMS express chipset, 256MB DDR2 memory, and 1-2GB hard disk drive. The machine is priced higher than the other two competing models.
Target Different Markets
Insiders noted that the market for low-end PCs in the U.S. or Africa has been shared among the three major low-price laptops at the moment. However, C.C. Leung, Quanta's new president, believes that each model is optimized for different market segments.
The OLPC association is aiming to make laptops obtainable for every child in lesser-developed countries. It says that the laptops can help an estimated 200 million children around the world in need of educational resources.
The association plans to distribute its XOs to children in under-developed countries through large procurements by local governments. So far, Uganda, Argentina, Brazil, Pakistan, Thailand, Nigeria and Libya have joined the project, and 27 other countries have expressed a keen interest in the project, according to OLPC. However, China and India, the world's two most populous nations, are not among them, giving Intel and ASUS an opportunity to promote competing models there.
Market analysts believe the success of the OLPC project will rely partly on the quality of the low-price machine and partly on whether the procuring governments use the machines for educational purpose or not. In any event, the project has at least succeeded in getting PC makers to develop low-priced laptops for schools with limited resources.
Quanta appears optimistic about such the business opportunity in this segment. Last year it set up an Education PC Business Unit. However, due to some restrictive clauses in the contract signed with the OLPC, Quanta is still considering whether or not to introduce the XO into the commercial market.
ASUS has targeted the segment of business people working for direct sales and insurance in developed countries. It plans to promote its EeePCs in six to seven colors to attract office women. ASUA will first launch the US$299 machine in Taiwan on a trial basis.
Intel is also working with China's Haier Group to promote new low-end laptops like the Classmate PC. The new computer, which hit the market in September, is aimed at China's 200 million farmers. (SC, Oct. 2007)
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