Chinapromoter Blog

The wireless local area networking (WLAN) product industries in mainland China and Taiwan are in transition. 802.11b, the de facto Wi-Fi standard for the past few years, is being supplanted by 802.11g, a backward-compatible protocol that is faster, has a wider range, and offers better security features.

Video communication over the Internet has thrust Web cameras as the next indispensable PC peripheral after mice and keyboards. The penetration rate with desktop and notebook PCs is expected to significantly increase as Web camera supply grows by 14 percent annually until 2008. About 140 makers form the backbone of the industry in Greater China, and the number is expected to increase in the coming months as the population of PC users who video chat/conference also rises.

Mainland China and Taiwan UPS manufacturers are keeping up with the increasing global demand for low-power UPS systems, as well as high-power, value-added units for industrial applications. Most are established suppliers of storage batteries, transformers and other power supplies before venturing in the UPS line.

Global shipments of printer consumables have undergone sustained growth, spurred by the surging demand for printing equipment and high performance desktop printing applications. However, the industry is not without its challenges.

For makers of remanufactured cartridges, empties are harder and more expensive to obtain because end users continue to resist recycling. Hence, makers may have to put in place more sophisticated, and often more costly, reclamation schemes.

2006 will be the breakout year for portable media players (PMPs). Previously hindered by high price quotes, digital rights management issues and limited video content from service providers, PMPs broke ground in 2005 because of the continuous decline of the costs of storage media such as fl ash memory and hard disk drives. About 60 percent of PMP models in the market today were launched during H1 2005.

Portable hard disk storage is on the rise due to increasing applications for gaming, digital home and products that act as a kind of digital multimedia adapter, boosting the demand of consumer electronics (CE) and car entertainment peripherals.

The success of digital audio players, particularly Apple's iPod, and portable media players (PMPs) has spawned an entire industry for compatible accessories. Global sales of accessories for iPod alone are projected to exceed US$500 million in 2005. This figure can easily double within two years as digital audio players become as commoditized as mobile phones. Many accessory suppliers in Greater China are taking notice of this potential market. New entrants will be lured into this profitable product line to expand the supplier base from about 200 suppliers in 2005 to more than 250 in 2006. Based on our survey of 13 mainland China makers and 15 Taiwan makers, Global Sources presents the following industry findings in this report:

In 2005, almost half of optical drives and 80 percent of optical discs shipped around the globe will originate from a mainland China or Taiwan manufacturer, with the latter accounting for the lion's share.

Taiwan's 10 optical drive makers and 15 disc suppliers are expected to ship 100.27 million drives and 11 billion discs worldwide in 2005, equivalent to 42 percent and 70 percent, respectively, of total global shipments. Imation, TDK, Maxell, Philips, Mitsubishi, Sony, Pioneer, Wal-Mart, Auchan and BestBuy are some of the major brands and resellers that source optical storage products from Taiwan.

Demand for notebook PCs continues to grow at a faster rate than that for desktop PCs. Notebooks are projected to account for 25 percent of global PC shipments in 2004, with the proportion expected to reach 33 percent in 2006.

Of the 42 million to 47 million notebook PCs that will be shipped worldwide in 2004, at least 50 percent will be produced in mainland China, mostly by Taiwan-invested manufacturers.

After several years of rapid growth, the market for USB flash drives has stabilized over the last 12 months. Growth, however, will be sustained through 2008 as such devices continue their proliferation across multiple applications.

According to research firm Gartner Dataquest, the global market revenue of the USB flash drive industry is expected to reach US$2.9 billion by 2008, a 51 percent increase over US$1.4 billion in 2004. In terms of production volume, manufacturers are expected to deliver 67.2 million units in 2005. By 2008, global production will total 98.2 million units, or a 54 percent increase.

The industrial PC industry is going through a time of rapid growth. This is especially true in Asia, where the market is expected to grow in excess of 30 percent during the current year. Driving this growth is strong emphasis on capital expenditure as most companies gear up for an uptake in the global economy.

The increasing demand for consumer electronic products has paved the way for a dramatic boom in the demand for flash memory cards and readers.

In 2004, about 12 million flash memory cards, valued at US$216 million, and 5.5 million card readers worth about US$30 million, were produced in mainland China. Seventy percent of memory card output was shipped to overseas markets.

The phenomenal popularity of digital entertainment and online gaming will lead to a greater demand for an enhanced audio experience than what is currently built into most desktop and notebook PCs. In conjunction with the growth in worldwide PC shipments, this translates into exciting opportunities for the computer speaker industry. The surveyed makers in this report will produce 45.7 million units of computer speakers in 2006, up 12.3 percent over the 40.7 million units in 2005. Revenue from sales of computer speakers in 2006 is estimated to reach US$456.4 million, a 49-percent jump from the US$306.2 million posted in 2005.

Growth in the computer mouse and keyboard markets is driven primarily by product replacement, which assures a constant market.

The keyboard market is undergoing mass replacement to reflect the trend toward PC-based entertainment. Aside from standard keys, new keyboard models feature built-in hot keys for Media Player or Internet surfing. Some models are also designed to optimize the PC gaming experience.

Computer case supply is booming in mainland China. More than 100 companies manufacture PC cases, with about 30 to 40 makers capable of filling customized, big-volume export orders. New makers continue to enter this line.

Leading suppliers are domestic-oriented companies with strong brand recognition, followed by export-oriented players whose only products are PC cases and who concentrate on OEM business. These two groups possess the manufacturing experience, maturity, marketing savvy and readiness to satisfy the sourcing requirements of global PC case buyers.

Motherboards and graphics cards dominate computer board and card manufacturing in mainland China and Taiwan. Sound cards, PCI LAN cards and internal modem cards are also available, but the production volume is shrinking every year. TV tuner cards have a stable niche market that is expected to grow due to the rising popularity of entertainment PCs.

Taiwan's Market Intelligence Center (MIC) estimates global shipment of complete PC systems at a conservative 163 million units in 2004. Of this number, 35.4 million units were estimated to be in barebone form: 15.7 million units of notebook PCs, 17.5 million units of desktop PCs and 2.17 million units of small form factor PCs.