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China Chips Away At Taiwan's Prized Tablet PC Industry

Dec 24 2013, 7:16pm CST | by

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China Chips Away At Taiwan's Prized Tablet PC Industry
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China Chips Away At Taiwan's Prized Tablet PC Industry

This threat to the Taiwanese economy, which depends on grabbing sizable shares of new IT hardware trends, has already hit contracts for lower-end tablets and begun taking aim at the premium ones, says Joen Yang, senior industry analyst with Market Intelligence & Consulting. China is simply “more flexible,” she says.

Low end happens to be where the action is. Makers of 7-inch “white box” brand media tablets, bought usually for entertainment, are selling promotionally for as little as $49 in North America, a hint that price dominates decision making from R&D to the shopping cart.

About 30% of the world’s white-box brands are contracted to cheaper China as the country’s supply chain gets “stronger and stronger,” the analyst says. She didn’t give a Taiwan comparison.

Tablet shipments from Taiwan have fallen from a historic high of about 35 million units in the fourth quarter of 2012 to less than 25 million in the third quarter this year, says Market Intelligence & Consulting, part of an IT development institute with Taiwan government funding.

Apple iOS tablets make up about two thirds per quarter, the consultancy says. Market research firm Gartner forecasts that world tablet shipments will top 184 million units this year and grow 43% in 2014.

Taiwanese factories still gets orders from Amazon, Apple, Google and its own Acer because of their record for quality, Yang says. But she says two other big-name tablet developers, one American and the other Japanese, shifted contracts to China in the second half of 2013.

How much longer Taiwan’s contracts last depends on whether local manufactures show reasons to choose them over China for savings and fast turnarounds in the competitive market. The island that has made gadgets for the world since the 1980s must prove itself against China now by reminding tablet developers of its legacy of patents, better client service or more advanced technology, Yang says.

They might also depend less on Europe and the United States. Consider instead doing contracts for emerging markets such as India, Russia and even China, the analyst suggests. Those markets are far from spoken for, she adds, though Taiwan will keep trying to stand out among Western clients as well. “Both brands and original equipment-original design manufacturers are willing to connect with emerging market players, as a strategy,” Yang says.

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