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.
Unpenetrated by camera giants such as Canon and Sony, none of the major Web camera makers has an overwhelming competitive edge yet. The majority of makers are small- and medium-sized companies that focus on OEM services, and some larger companies that promote their own brand.
The dominant manufacturing hub is Guangdong province, particularly in Shenzhen, where production is supported by an ample supply of engineering talent and key components.
The surveyed makers in this report will produce 23.09 million units of Web cameras in 2006, up 33 percent over 17.3 million units in 2005. Revenue from sales of Web cameras in 2006 is estimated to reach US$105.49 million, a 20-percent jump from the US$87.79 million posted in 2005.
This report covers 100,000-pixel to 2.3-megapixel CMOS and CCD Web cameras that connect to a PC mainly through USB 1.1 and 2.0 ports. Based on the manufacturing, product development and export statistics from 27 manufacturers, including 18 from mainland China, eight from Taiwan and one from Hong Kong, Global Sources presents the following findings:
Industry Overview
New communication applications enabled by broadband Internet, such as video instant messaging and video calling, are fueling the rising supply of Web cameras.
Twenty-seven surveyed makers in Greater China are expected to ship 23.1 million units in 2006. Global output will register an annual 14-percent growth until 2008.
Stiff competition engendered by the large supplier base has turned Greater China into the most dynamic source of affordable to high-end Web cameras.
Large Production Capacities Awaiting Utilization
There are more than 100 makers of Web cameras in mainland China, though only about 20 companies consider this line as their primary business. Most suppliers focus on OEM services and are medium-sized companies that entered the line after 2003. They are estimated to account for 40 percent of global shipment of Web cameras, with plenty of capacity to spare.
Many makers have ramped up capacities in 2005 and H1 2006, and with average utilization at only 44 percent, they are primed to meet the expected demand up to 2007.
There are about 40 makers in Taiwan, which are mostly small- and medium-sized companies that focus on OEM and ODM services. Some of the leading makers promote their own brands.
The main manufacturing bases are Shenzhen (see Manufacturing hub for a rundown of Shenzhen's attraction as a production center) and Dongguan in Guangdong province, and Suzhou in Jiangsu province. About 80 percent of makers are concentrated in Shenzhen and Dongguan, where the supply chain is mature and professional service providers abound.
Suzhou hosts among others, market leader Logitech Inc.'s factory, which turns out at least 6 million Web cameras annually.
Chronic labor shortage aside, makers will continue to cluster in these areas until 2007. Seventy percent of Web cameras produced in mainland China are exported, mainly to Europe, North America, Southeast Asia and the Middle East. OEM buyers, including RadioShack, Circuit City and Carrefour, receive 80 percent of shipments.
Supplier Profile
A4Tech Co. Ltd
Established in 1987, A4Tech Co. Ltd started producing Web cameras in 2004 to add to its growing line of computer peripherals that included keyboards, mice, multimedia speakers and headsets.
A4Tech projects Web camera sales of US$7 million in 2006. This is 35 percent higher than the US$5.2 million posted in 2005, almost all of which came from exports, out of total turnover of US$78 million. It forecasts shipment of Web cameras to reach 1 million units in 2006, an 82-percent jump from 550,000 units shipped in 2005.
The company's strengths are its in-house manufacturing and R&D capability, as well as more than 10 years of OEM experience. It offers OEM services, providing color and creating custom designs by request to match most systems. Buyers can also choose from a wide array of A4 Techbranded Web cameras.
A4Tech's major export markets are Europe, North America and Asia, taking up 60 percent, 20 percent and 20 percent of exports, respectively. HP, Circuit City, Fry's Electronics, Kensington, General Electric and RadioShack are some of its major customers.
To further boost international sales, A4Tech is a regular exhibitor in various trade shows including CES, Computex and CeBIT. Branch offices have been set up in Japan, mainland China, the United States, Germany, the United Kingdom and Austria.
Manufacturing Capability
A4Tech manufactures Web cameras at its 25,000sqm factory in Dongguan, Guangdong province. Employing 2,000 workers, the factory can turn out 50,000 units per month.
Except for SMT and printing of gift boxes, A4Tech conducts all manufacturing processes including mold making, plastic injection, painting, assembly and packaging at this facility.
Inside A4Tech's factory are 50 plastic injection machines, 15 printing machines, 100 computers for testing, and eight shielded rooms. It continuously invests in R&D equipment such as 2.51GHz signal generators, spectrum analyzers, LCR electric bridges, and electrical safety compliance analyzers. Tooling is conducted in-house using turret milling machines, electric discharge machines and grinding machines, to ensure that the tooling process meets the standards demanded by customers.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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