TAIPEI: Production output from the local contract electronics industry might decline this year on the back of Apple Inc’s lower iPhone sales and rising competition from China, the Market Intelligence and Consulting Institute (MIC) said yesterday.
“We forecast the output of Taiwan’s smartphone industry will shrink 5.4 percent year-on-year to NT$2.12 trillion (US$65.08 billion) this year,” MIC advanced network communications technology senior analyst Remus Hsu told a news conference in Taipei.
Hsu said that the output of Taiwan’s contract electronics supply chains for smartphones are expected to be dragged down by the weaker-than-expected high-end iPhone sales, adding that Apple’s lower-priced iPhone SE suppressed the growth momentum of production value in the industry.
In addition, HTC Corp’s falling shipments of smartphones and Asustek Computer Inc’s delayed launch of its next-generation ZenFone will also hurt the overall output of Taiwanese contract electronics makers this year, Hsu said.
Within the smartphone industry, production value of component suppliers, which includes casings, cellular power amplifiers and antenna, might fall as much as 34.9 percent to NT$123 billion this year, from last year’s NT$189 billion, Hsu said, citing the institute’s latest forecast.
Apart from the falling output in the smartphone industry, Taiwan’s notebook industry is also expected to witness declining output this year and its scale of annual drop is likely to be higher than the global average in light of rising supply-chain companies in China, MIC PC industry consultant Charles Chou said.
“Some notebook vendors have shifted their orders from Taiwanese contract makers to Chinese makers due to cheaper quotations offered there,” Chou said.
Chinese firm BYD Co Ltd’s entry into the supply chains for making notebooks for Asustek since December last year is one of the examples, Chou said.
Another example is that Tsinghua Tongfang Co Ltd has worked with Acer Inc to manufacture notebooks on a project-by-project basis, he added.
Chou said Lenovo Group Ltd has started to allocate more notebook orders for Lienpal Ltd— a joint venture with Taiwan’s Compal Electronics Co, while cutting its orders to other Taiwanese contract notebook makers.
While the global demand for notebooks remains weak, Chou said global shipments of two-in-one detachable notebooks are expected to jump 92.1 percent annually to 25.56 million units this year. Detachable devices are more than 90 percent manufactured by Taiwanese companies, he said.
However, Chou said the growth momentum of the two-in-one detachable product is not enough to offset the softness of the global notebook industry.
Overall, Chou said MIC forecasts Taiwan’s notebook product shipments this year to drop 7.4 percent year-on-year to 127 million units, falling further than the estimated 6.8 percent drop in global notebook shipments.