Motorola Affecting Downstream Suppliers

Taiwanese suppliers to Motorola are being heavily impacted by Motorola's poor performance. Motorla's shares recentely tumbled to a 52-week low on Friday to $8.98, 43% down from the a beginning of the year according to IT Portal. IT Portal also says:

Its [Motorola's] mobile phones, which once made up almost a quarter of the global market, are now accounting for less than 1 in every 11 handsets sold and has been overtaken by Samsung electronics; meanwhile smaller competitors like LG Electronics are also catching up.

China Economic News (CENS) points out that this has severely affected Taiwanese suppliers. CENS reports:

In the first quarter of this year, Motorola shipped only 27.4 million mobile phones, sharply down 40% from 45.4 million units posted a year earlier. This has heavily undermined the business operations of its Taiwanese contract suppliers, including Compal Communications, Chi Cheng, Largan Precision Co., Foxconn Technology Group, Silitech Technology Corp., Merry Electronics Co. and Unimicron Technology Corp, especially Compal Communications and Chi Cheng, which both have over half of their total revenues come from sales to Motorola.

One company that has felt the pain of Motorola's non-performance is Wintek. In Q1 2007 Wintek were severely affected by Motorola's non-performance and what Digitimes calls "Motorola's inventory issues." However by diversifying both their client and product portfolio they were able to grow their March sales by 31.97%. According to Digitimes:

Since then (Q1 2007), Wintek has actively developed other applications, such as touchscreens, PNDs and digital photo frames, and has acquired its second 3G LCD panel line from HannStar Display. Its first 3G line also came from HannStar.

With the addition of new orders and new clients, Wintek was able to reduce Motorola's proportion in its first-quarter sales, industry sources said.

Despite this growth in sales, Wintek's stock has also suffered some pain over the last year. From trading at nearly NTD50 per share, the stock dropped to nearly NTD26 and is now trading at around NTD30. The effect of Motorola's non-performance on Taiwan companies does seem to be large. It seems the other companies will have to try and do what Wintek did and find new clients and new growth markets. Here is hoping they succeed.

Article 1: Motorola shares fall to their all time low, could be downgraded
Article 2: Motorola`s Tumbling Sales Hurt Its Contract Suppliers in Taiwan
Article 3: Wintek March sales grow almost 32%

AMD Targets Small and Medium Businesses

Interesting report in from the Wall Street Journal (WSJ) on AMD's realigned business strategy to target small and medium sized businesses. WSJ says:

The Sunnyvale, Calif., semiconductor company on Monday expects to unveil an initiative -- code-named Hardcastle and now renamed AMD Business Class -- that comes with a "platform" of chip technologies to help PC makers build machines tailored to the needs of smaller companies. AMD's effort is based around its Athlon and Phenom microprocessors, which come in models with two, three or four electronic brains, as well as accessory products called chip sets that AMD has offered since its 2006 purchase of ATI Technologies.

According to WSJ:

All the major PC makers "are lining up," said Hal Speed, an architect in AMD's desktop division. "We're definitely looking to take market share."

The AMD site says:

AMD Business Class technology was designed with business in mind to deliver the best value on the market. These specially engineered platforms offer the features and price points that meet the needs of today’s business computer buyers, from multinational enterprises to small businesses.

AMD Business Class technology provides exceptional business value by providing a solid, reliable foundation for systems that offer industry-leading stability and longevity, exceptional performance and energy efficiency, and essential security and manageability.

It seems they are just repackaging what they already have. Maybe they can steal some market share, but it will be hard.

WSJ Article: AMD Sets Major Pitch For Small, Midsize Firms
AMD Site: AMD Business Class: Designed with Business in Mind

Will the DRAM Market Recover?

Recently there are reports the DRAM market is on the way to recovery. There is a general level of optimism the market has bottomed out and the only way forward is up. Digitimes says after suffering from severe Q1 losses in 2008, Inotera and Nanya are being more optimistic about the market in Q2. Both companies believe DRAM prices are set to rise. According to the article:

Pei-Lin Pai, Nanya company spokesperson and vice president of global sales and marketing, said inventory at contract customers is tightening. Therefore, Nanya is preparing to raise its quotes by over 10% in the first half of May. An increase in customers adopting 2GB modules built on 1Gb chips is the major reason for the the improvement, Pei explained.

Inotera company president Charles Kao also thinks the DRAM industry is warming up and says they will complete their switch to their 70 nm manufacturing plant in July. In a separate Digitimes article, the chairman of Powerchip Semiconductor Corporation (PSC) Frank Huang said he believed the worst was over. According to the article:

The price of 1Gb DDR2 is likely to stabilize at US$2 in May, and if pricing can surpass US$2.50, the company [PSC] will swing to profit.

This optimism is shared by DRAMExchange. According to them the market can is expected to rise. Commenting on recent trends they said:

Prices posted a surge on April 21, as evident in the 5.32% and 6.69% single-day appreciation for DDR2 1Gb 128Mx8 eTT and 512Mb 64Mx8 eTT. As magnitude of growth is rapid, sellers thus being conservative to release their stocks.

Most DRAM companies have experienced difficulties over the past year or so. The cause of the problem was oversupply when Windows Vista was launched. Vista uses a lot of memory and therefore, to prepare for the launch of the OS, many DRAM manufacturers went into overdrive on production. However, the low adoption rate of Vista by the industry meant there was an excess in the supply of DRAM modules. Standard economic dictates this would drive down the price. And so it did.

Most DRAM companies have felt the pain over the last year. Many of them have been hanging in and fighting against the tide. Hopefully for them the future is bright. For the consumer however DRAM modules will probably become more expensive.

Article 1: DRAM pricing warming up, say Inotera and Nanya
Article 2: DRAM industry over the worst, says PSC chairman
Article 3: DRAM Price momentum to shoot up from June

WiMAX Explosion in Taiwan

Yesterday we noted Intel's commitment to investing US$500 million in Taiwan's WiMAX industry. Apparently the commitment is even deeper than that. Intel are also committing to entering in joint ventures with Taiwanese companies to develop broadband networks on the island. China Economic News (CENS) has more:

Intel will spend US$500 million over the next five years ending in 2013 on its WiMAX investment and procurement of the equipment in Taiwan, in addition to its original pledge to invest an undisclosed amount of capital to open WiMAX joint venture in Taiwan, according to an Intel top executive.

Intel Executive Vice President Sean Maloney noted the procurement items would include WiMAX chips and consumer premise equipment. Taiwanese suppliers likely to benefit from the procurement deal include MediaTek Inc., Faraday Technology Corp., GemTek Technology Co., Ltd., D-Link Corp. and Zyxel Communications Corp.

In reaction, CENS reports that President elect Ma Ying Jeo has committed to attending the WiMAX trade show to be held in Taiwan in June. In the same article CENS reports Intel has opened a WiMAX office in Taiwan and also notes the following observations:

Taiwanese industry watchers estimate the latest and previous commitments to cost Intel around NT$20 billion (US$666 million at US$1:NT$30) in investment capital.

The joint venture will assess plans to put money into Taiwanese network-communications equipment makers and WiMAX-service providers. Taiwanese companies of both sectors reported to receive the investment capital include GemTek, D-Link, Tatung InforComm Co., Ltd., First International Telecom Co., Ltd., and Global Mobile Corp. However, Intel said it was still assessing.

In a separate article CENS observes that the Taiwan government is trying to get 8 million on-island WiMAX subscribers during 2008. According to CENS:

Taiwan has been actively engaged in developing WiMAX (worldwide interoperability for microwave access) network technology, and planned to have a total of 8 million users of services based on the technology by the end of this year, according to Chen Chao-yih, director general of Industrial Development Bureau (IDB) under MOEA.

PC manufacturers are also getting on this bandwagon. Digitimes noted yesterday that Acer is currently testing WiMAX enabled notebooks that they hope to launch in June. The notebooks will be based on the fifth-generation Centrino code-named Montevina.

WiMAX is going to change the world no doubt. It provides added wireless convenience and enables easy connectivity over long distances. One wonders though what the packages will be like. The push towards WiMAX in Taiwan is not surprising. Under now president elect Ma Ying Jiou Taipei became the worlds first wirless city in 2006 with thousand of Wi-Fi nodes distributed throughout the city. However, as noted by the New York Times, the system had a very low adoption rate in the beginning. Of course WiMAX's big advantage is the bandwidth and the speed with which data can be dowloaded. But still, how will it be packaged?

Article 1: Intel Pledges to Up Ante On Taiwan`s WiMAX Biz
Article 2: Taiwan Aims to Attain 8 M. Users of WiMAX in 2008
Article 3: Acer to launch WiMAX-enabled Montevina-based notebooks in June-July
Article 4: What if They Built an Urban Wireless Network and Hardly Anyone Used It?
Website 1: WiFly Website
Website 2: WiMAX Show Website

Growth of Low Cost PCs

ASUSTek has recently launched an 8.9-inch Eee PC. China Economic News (CENS) predicts shipments for these products will reach 1.3 million in Q2 and 5 million for the year. CENS notes this is ASUSTek's first low cost Intel platform. Intel however do have a competing product yet, according to CENS:

Asustek indicated that Intel, though already launching Classmate PC, a competing model against Asustek`s Eee PC, concentrates more on its sales of CPU (central processing unit) and hence has helped Asustek garner numerous governments` tender projects so far.

Digitimes notes that ASUSTek is very optimistic about these products and plan to launch a 10-inch display model later in 2008. Digitimes also notes that while ASUSTEk is aggressively pursuing this market, other players are being far more conservative.

Asustek is believed to have ordered 2.5-3 million Atom processors from Intel, while Acer has ordered around one million and may place another one million unit order depending on market demand for corresponding low-cost PCs in the later half of the year, according to industry sources. Meanwhile, Dell has been more conservative in only ordering around 300,000-500,000 Atom CPUs, while previous reports indicate Hewlett-Packard (HP) has placed an initial order for 100,000 VIA Technologies C7-M ULV CPUs to be used in its Mini-Note products, which will increase to 500,000 units by year's end. Other players including Micro-Star International (MSI) and Gigabyte Technology are even more conservative, ordering far lower volumes than their competitors, according market watchers.

Low cost PCs are also breaking into the industrial PC market with Digitimes reporting that Nexcom will also be launching a medical tablet PC based on the Atom processor.

Watching the growth of this market sector will be interesting. Currently 50% of all demand is in Europe and it will be interesting to see how the regional mix changes over the next year or so. I am personally thinking of buying one of these low cost PCs. I think they are perfect. Light, easy to carry and easy to hook-up to a big external hard drive at home. I guess the real question is why do you need to carry all the storage capacity you don't really use or access? Of course some people will prefer the high-end notebooks but these low price PCs are definitely carving out their own market sector.

Article 1: Asustek Unveils 8.9-inch Eee PC
Article 2: Intel Atom-based Eee PCs in June, 10-inch displays later in the year, says Asustek president
Article 3: Nexcom planning Atom-based industrial tablet PCs

Quanta and ACER get behind WiMAX

Recently Digitimes noted the formation of a WiMAX consortium here in Taiwan. According to Digitimes:

Four Taiwan WiMAX licensed operators – Global Mobile, Vastar Cable TV System, Tatung Telecom and First International Telecom (Fitel) – on April 15 formed the Consortium of Mobile Broadband (CMB) with an aim to facilitate the development of the WiMAX industry in Taiwan.

China Economic News (CENS) reported shortly thereafter that Taiwanese PC manufacturers are supporting the WiMAX standard. CENS reported:

Taiwan's top two PC makers-Acer and Quanta Computer-recently joined the island`s telecom providers to form an alliance christened "Consortium of Mobile Broadband (CMB)" to promote WiMAX technology.

The article continues:

Industry watchers on the island said the allying suggests that makers of network-communications equipment PC makers have emerged as another major force pushing the formation of the next-generation mobile industry in Taiwan.

Intel has is also getting behind the development of WiMAX in Taiwan. Reuters reports:

Intel Corp said on Monday it will invest $500 million in Taiwan over the next five years, with a large amount of the investment targeted at the island's WiMAX sector.

As I also noted last week, at the top of NEC's procurement list were WiMAX components. WiMAX is growing in Taiwan.

Article 1: Taiwan licensed WiMAX operators form consortium
Article 2: Taiwanese PC Makers Join WiMAX Camp
Article 3: Intel to Invest $500M in Taiwan to Boost WiMAX
Previous: NEC to Purchase Components Worth Three Billion USD
About WiMAX: WiMAX Forum, Wikipedia

Taiwanese Firms Moving to Vietnam

China Economic News (CENS) continues to update on Taiwanese firms moving to Northern Vietnam. (See Vietnam the new Promised Land) In an article posted Friday (April 18) CENS says:

To ease the impact of skyrocketed production costs in mainland China, Taiwanese firms operating there, including those form the electronics and conventional industries, are rushing to move operations to northern Vietnam.

The relocation move such leading electronics as Hon Hai Precision Industry Co. and Compal Electronics Corp. is expected to encourage more Taiwanese firms to do so in the second half of this year. Taiwan`s top-five electronics firms have all set up production facilities in the northern part of Vietnam.

However, all this movement is pushing up property price in Vietnam, especially in Hanoi. The article says:

...the average land price for some industrial zones in northern Vietnam is set at 200,000 renminbi per acre, quite the same as those located in eastern and southern parts of mainland China.

I am sure we will hear more about this as time goes by. However, one should imagine that rising costs in Vietname will eventually force many companies to return to Taiwan or to expand elsewhere. I personally believe this is good for Vietnam. Much of the success of Guangdong Province in South China can be attributed to the massive investment from Taiwanese firms there. Perhaps Vietnam can reap the same benefits and their people can have an improved quality of life.

Article: Taiwanese Firms Switch Operations to Northern Vietnam From Mainland China
Previous Coverage: Vietnam the new Promised Land

VIA Processors Making a Comeback

According to Digitimes, VIA processors are making a comeback on low cost PCs. Digitimes reports:

With Hewlett-Packard (HP) said to have ordered 100,000 C7-M ULV processors for its initial mini-note low-cost PC launch, (which is expected to reach 500,000 units in total in 2008) while Gigabyte Technology's new M700 series UMPC (ultra mobile PC) will also adopt VIA Technologies' CPUs, the Taiwan-based chipmaker may have a chance of recover from its long series of losses, according to industry watchers.

In addition to HP and Gigabyte, more hardware vendors are said to be evaluating VIA's CPUs for their UMPC and low-cost PC products.

The Atom processors recently lauched by Intel have certain limitations and therefore are not attractive to low cost PC manufacturers.

I also managed to dig up an old 2001 interview with Wen-chi Chen, VIA' s CEO. In that interview he argues for the development of the low cost processor. When asked why focus on cheap processors he argued:

We think that the value-line product will be the fastest growing in the whole PC space. It can easily grow another 20% higher than the whole market. That's the market where people want the products. People are looking at [a] second or third PC for the home, and the value line serves that purpose better..

When asked why, he replied:

The Internet will be the biggest driving force. For Internet applications, the processor is not the main requirement -- the pipe is more important than the engine. It's like the auto industry: It used to be that people build bigger and bigger engines. But the road was only so wide, and car drivers were more limited by the road than by the engine. So people started looking at efficiency of the engine and went to smaller engines..

It seems his 2001 optimism about this market is about to pay off. No doubt however AMD and Intel will respond and, even though the Atom has limitations, if there is money to be made they will readjust their strategy to ensure they stay ahead of the pack.

Article 1: VIA CPUs to stage comeback in low-cost PC market
Article 2: Wen-chi Chen: Taiwan's Answer to Andy Grove? [PDF File]
C7 2006 Press Release: New VIA C7®-M ULV Processor Family
C7 Product Page: VIA C7®-M ULV Processor

Amazing Taiwan

Just found and interesting book on Amazon.com. The Silicon Dragon: High-Tech Industry in Taiwan. Looks interesting but pricy at US$120.00.

To judge from its size, Taiwan, an island of about 30,000 km², is only a tiny dot on the globe. Its size, almost equal to that of the Netherlands, is about one seventh the size of the United Kingdom, one 250th the size of the United States, one 260th that of China, and cannot even be seen on a world map. Taiwan had nonetheless achieved a production value of US$21,000 million by 1999 and become the third biggest manufacturing centre of information hardware with over 40 computer-related product ranked first in the world. These products include scanners, monitors, motherboards, desktops and notebooks, and key components such as computer chips. Considering its size, Taiwan's achievements in the computer industry ae remarkable.

Indeed....

Reference: Bor-Shiuan Cheng, "'Dragon appearing in the field': the legend of semiconductor industry in Taiwan," on page 1 in "The Silicon Dragon: High-Tech Industry in Taiwan" edited by Terence Tsai and Bor-Shiuan Cheng)

Morris Chang: TSMC Founder

Morris Chang is one of Taiwan's true pioneers. I just found this interview with him. It dates to last year, but very interesting. The interviewer is the NVIDIA CEO. Really good stuff.



If there is an error message that says the video is no longer available, try here:Morris Chang with Jen-Hsun Huang

NEC to Purchase Components Worth Three Billion USD

The government website Invest in Taiwan (IIT) reports NEC, Japans largest computer manufacturer, will purchase more than USD3 billion worth of components from Taiwan, second behind Sony. Their largest procurements will be of WiMAX components. IIT says:

At the top of NEC's procurement list were WiMAX components such as broadband and network peripherals, surpassing notebook computers for the first time ever as the top procurement item, said NEC Taiwan general manager Akira Kubota. NEC has also set a procurement goal of USD 3 billion for the new fiscal year, which starts in April, he said.

Additionally, NEC has set already setup a WiMAX R&D center in Taiwan and will also focus on selling more products into the Taiwan market.

Kibota (NEC Taiwan GM) said that with the new fiscal year, NEC Taiwan will place equal focus on selling hardware and introducing its SI solution to the Taiwanese market. The company's customer targets will be Taiwanese government agencies, financial institutions, the retail sector, IT industry, and the manufacturing sector; the company also plans to introduce a version of its SI solution for the tourism industry, specifically to European and US-run five-star hotels, he said.

Article 1: NEC procurement in Taiwan to reach USD 3 billion this year, plans to market SI solution

Adlink Acquires Ampro

In their quest to become one of the largest industrial PC manufacturers in Taiwan, Adlink acquired Ampro, a high-end industrial PC manufacturer with 25-years experience. Ampro products are applied in typical IPC applications such as communications, aviation and military. Digitimes reports:

The addition of Ampro enables Adlink to offer Extreme Rugged, rugged and industrial products and services for use in aircraft, trains, ships and other environments that subject equipment to extended temperature, shock and vibration.

Digitimes reports that this acquisition makes Adlink the third largest IPC manufacturer in Taiwan and the China Economic News (CENS) reports:

ADLINK Technology Inc., after fully acquiring U.S.`s Ampro, is also expected to see its April revenue hit a single-month high.

Article 1: Adlink Technology completes acquisition of Ampro Computers
Article 2: Taiwan`s Industrial Computer Makers Post Solid Sales Performance in Q2

UMC to Manufacture iPhone Chips

According China Economic News (CENS), UMC has received orders from Infineon to manufacture second generation chips for the Apple iPhone. According to CENS:

Infineon Technologies will contract United Microelectronics Corp. (UMC) to make the 65nm base-band chips it designs for 3G version of Apple iPhone, ending Taiwan Semiconductor Manufacturing Co.`s (TSMC`s) monopoly in foundry manufacturing of iPhone chips.

The German chipmaker has placed foundry orders for frequency chips used in first-generation iPhones with TSMC, which uses 90nm process to make the chips. Insiders pointed out Infineon decides to farm out the production contract to UMC, the No.2 pure silicon foundry, out of cost concern. They estimated Infinenon will maintain production of the 90nm analog frequency chips at the No.1 foundry player.

Taiwanese industry watchers pointed out that the latest contract represents 65nm market is growing mature and competition in market of leading-edge processes will become more intensive. In the meantime, Infineon will entrust chip assembler Siliconware Precision Industry Co., Ltd. to package and test its chips.

(Article: UMC Breaks TSMC Monopoly in iPhone Chip Foundry)

Happy Birthday Infortrend

Infortend is a leading RAID storage solution provider. I worked there for more than two years and really enjoyed it. Anyway I just noticed that this year is their 15th anniversary. They have continued to lead the way in storage technology and continue to develop great products. Here is some blurb from their official press release:

"As we celebrate Infortrend’s 15th anniversary, we would like to thank our valued customers, trusted distributors and resellers, and dedicated employees for the success we have achieved so far," said Stone Lo, president and CEO of Infortrend Technology Inc. "For the past fifteen years, Infortrend's goal has been to design and deliver products that combine leading-edge features with value and dependability. Our customers can count on us to continue to make great strides in storage technology and offer them the best products available in the RAID market for many years to come."

Although its been four years since I left, I am still very fond of that company. They had a great staff and excellent people management and were always very understanding of my personal needs. I certainly hope they continue to go from strength to strength and that they continue to lead the way in their field.

Taiwan's Nanotechnology Industry

Although still in its infancy, Taiwan’s nanotechnology industry seems poised for growth. Taiwan’s government has made a concerted effort to promote nanotechnology in Taiwan and since 2003 the nanotechnology sector has seen more than NTD300 billion in revenue (source). The government recently pledged another NTD23.2 billion over the next six years to developing nanotechnology in Taiwan. Invest in Taiwan last year reported 62% of the NTD23.2 billion is “earmarked for industrialization.” The rest will be directed towards R&D. This level of investment shows Taiwan’s intent to become a major competitor in the nanotechnology industry.

Furthermore, government support for nanotechnology R&D has provided a lease on life for ailing companies that were highly exposed to competitive forces from China, India and other South East Asian countries, who leveraged cheap labor costs to force some of Taiwan’s more traditional companies onto the back foot. In 2004 the government publication Taiwan Review highlighted how Kai Pong Ceramics become a nanomaterials manufacturer after their traditional ceramics business was in danger of being closed down as a result of competitive pressure.

TSMC is perhaps the leading Taiwanese nanotechnology (nanoelectronics) companies. In October 2005 they were invited to join seven of the world's leading IC manufacturers; including Infineon, Intel, Matsushita/Panasonic, Philips, Samsung, STMicroelectronics and Texas Instruments; as a core partner on the sub-45nm CMOS program at IMEC (Interuniversity Microelectronics Centre), one of Europe’s leading microelectronics research facilities. In 2006 TSMC also signed a contract with NXP to work on nanoelectronics devices and in that year spent over NTD1 billion on R&D.

Taiwan’s nanotechnology sector seems to be gaining credibility. Taiwanese nanotechnology researchers participate in the annual nanotechnology expo in Japan and Taiwan recently signed a cooperative agreement with Australia to further develop the nanotechnology cooperation between the two countries.

Additionally, according to Invest in Taiwan:

Taiwan researchers have published a total of 3,745 articles for international publications and journals. To date, Taiwan has obtained 310 overseas patents and 39 domestic patents, and under the program, has seen 232 cases of technology transfer and 184 cases of advanced technology transfers, worth approximately NTD 170 million. One hundred seventy-five companies are engaged in nanotechnology investment, worth a total of over NTD 3.96 billion to date.

While this doesn’t necessarily imply success, the commitment of the government to the commercialization of these technologies possibly means there will be opportunities in the future for Taiwan high tech firms and others to successfully commercialize this research and develop a whole new high tech industry in Taiwan.

I personally am looking forward to see how the nanotechnology industry in Taiwan develops in the future.

Industrial PC and NB Makers Have a Good March

China Economic News (CENS) reports that many of Taiwans Industrial PC (IPC) manufacturers have done well in March and are looking forward to good sales for the remainder of the year. CENS reports:

With increasing orders from clients, Taiwan`s makers of industrial computers have posted solid sales results for the first quarter of this year and are expected to maintain that performance in the second quarter.

DFI received orders from IBM and many Japanese customers. WinMate Communication has capitalized on increased from Europe for industrial LCD and also gambling machines. IBASE has also benefitted from demand for "gambling machines, motherboards and network security appliances." Meanwhile Portwell has increased sales of their POS machines and European demand for medical products has benefited AAEON.

Good news for me however is (ICP Electronics is my comapany's parent):

Incidentally, ICP Electronics Inc. is scheduled to complete construction of its eight new production lines in Shanghai between April and May and will see its sales significantly grow in the second quarter.

CENS also reports that NB makers also had a stellar March:

Taiwan`s leading contract manufacturers of notebook computers, including Quanta Computer Inc. and Wistron Corp., saw booming sales in March. Domestic institutional investors predicted domestic NB contract manufacturing industry will see shipments continue to grow at the pace of 10% up to 15% year-on-year in the second quarter of this year.

CENS added:

Thanks to the increased orders from such big brands as Apple, Hewlett Packard and Toshiba, Quanta is expected to see annual shipments grow 19% up to 25% year-on-year this year.

Wistron has also done well. CENS says:

Thanks to the injection of orders from such big clients as Acer, Hewlett Packard and Dell Computer, Wistron Corp. saw shipments of PCs grow at a pace faster than anticipated in the first quarter.

Inventec has also done very well with a "3.089% year-on-year and up 5.18% from the preceding month."

So hi-tech Taiwan seems to be going from strength to strentgh, even in this economic slow down. We will see how far they can run. However, it should be noted that Taiwan may be becoming less dependent on sales to the US as new markets have opened up. Perhaps these new markets are driving sales. Whatever is driving sales, right now Taiwan's big players are doing well.

Article 1: Taiwan`s Industrial Computer Makers Post Solid Sales Performance in Q2
Article 2: Taiwan`s Contract NB PC makers Rake in Booming Sales in March

Low Price PCs: Start of a new revolution (maybe)

Digitimes reports that both HP and Asustek are going to launch their low cost PCs in Hong Kong. today. Digitimes says,

With Hewlett-Packard (HP) launching its Mini-note PC in Hong Kong today (April 15), Asustek Computer has also decided to launch its Eee PC 900 in the same region and on the same day, according to channel sources.

Digitimes continues,

After the initial launch in Hong Kong, Asustek will launch its Eee PC in Taiwan, Japan, China, Europe and North America in the later half of April.

The development of low-cost computers is good for Taiwan. The HP variant is apparently based on a VIA Technologies platform. Furthermore, according to China Economic News (CENS), Dell's decision to move into low-price PCs is one reason why Compal, another one of Taiwan`s leading manufacturers of notebook computers, will boost production in China. According to CENS,

Compal Electronics Corp will expand production capacity at its fourth plant in Kunshan of Jiangsu Province, mainland China. The expanded plant will begin mass production sometime in the second quarter of this year to facilitate delivery of low-priced PCs ordered by the U.S.-based Dell Computer Inc., along with the growth in shipments of NBs.

However, Compal president J.T. Chen noted

...his company would introduce low-priced computers sometime in the second half of this year. But Chen noted that shipment of low-priced PCs would account for less than 10% of the company`s total shipment this year.

Commenting on the recent development in this market, CENS observes:

Seeing the successful introduction of the budget-priced "Eee" PC by Asustek last year, Hewlett Packard will introduce the US$500 Mini-Note NB equipped with 8.9-inch screen and VIA Technologies` C7-M microprocessor at the end of April; while Acer will debut its low-priced, Quanta Computer-manufactured NB equipped with Intel Corp.`s "Atom" microprocessor sometime in June.

Digitimes further reports that low-cost PCs are also going to drive the demand for touch panels in 2H 2008.

Low-cost notebooks, such as Asustek Computer's Eee PC, are expected to boost demand for medium-size touch panels in the second half of the year, as adoption of touch panels by these systems will grow fast, according to industry players and observers.

With small-size touch panels already seeing massive adoption by handsets and GPS devices, 5-10-inch touch panels are promising to become a big hit among high-end ultra mobile PCs (UMPCs) and mobile Internet devices (MIDs), as well as low-cost PCs, the sources remarked.

I guess its all good for Taiwan companies. They are all involved in the development and manufacture of these products and the associated components.

(Article 1: HP and Asustek bring low-cost PC battle to Hong Kong
Article 2: Compal Ups Production Capacity in Kunshan of Mainland China
Article 3: Eee PCs and other low-cost notebooks to boost touch panel demand in 2H08)

Taiwan EMS Companies Having a Good Year

China Economic News (CENS) reports Hon Hai Precision Technology topped NTD100 billion reaching NTD104 billions. CENS reports:

Hon Hai Precision saw March sales grow 18.8% year-on-year and up 12.7% from the preceding month, achieving the sixth-highest monthly sales in history. The company scored NT$301.8 billion (US$9.89 billion) in cumulative sales in the first quarter of this year, up 22.3% year-on-year but down 27.1% from a historic high in the fourth quarter of last year.

Meanwhile CENS also reports that both Wistron and Inventec have also done well in Q1. CENS says:

Wistron Corporation, one of Taiwan`s leading manufacturers of notebook computers, registered NT$34.268 billion (US$1.12 billion at US$1:NT$30.5) in sales in March, up 63.5% year-on-year and up 41.6% from the preceding month, hitting a historic monthly high.

CENS continued:

Inventec Corp., another large-sized NB manufacturer, registered NT$21.8 billion (US$714.75 million) in March sales, up 17% from the preceding month`s NT$20.75 billion (US$680.32 million) and representing a slight growth of 3% from a year earlier.

The company scored NT$66 billion (US$2.16 billion) in sales in the first quarter of this year and expects to see a 20% year-on-year growth in sales in the second quarter. The optimistic projection for the second quarter is based on the shipment growth in business-type and large-sized NBs.

Article 1: Hon Hai Saw Monthly Sales Rebound NT$100 B. in March
Article 2: Wistron Achieves Highest-ever Sales in March)

Forex Effect on Taiwan Companies

More on foeign exchange. Digitimes reports that Motech Industries, a solar cell manufacturer, have suffered an erorosion in their Q1 profits due to a strengthening NT dollar. Digitimes reports:

Motech Industries reported unaudited net profits of NT$239 million (US$7.88 million) in the first quarter of 2008, an amount that was severely eroded by exchange rate losses.

Motech posted gross operating profits of NT$819 million (US$27 million) and non-consolidated income of NT$666 million in the first quarter of 2008. Net profits for the first quarter was NT$239 million. The company's gross margin shrank from 17% to 16.7% due to expenses from employee bonuses. Earnings per share (EPS) was NT$1.16.

Industry watchers noted that Motech is still having consistent sales growth, as evident in its quarterly sales of NT$4.9 billion. However, the rapid appreciation in the New Taiwan (NT) dollar against the US dollar, as well as an inefficient currency hedge policy, led to a booked exchange loss of NT$400 million. The exchange loss stemmed from unused global depository receipts (GDRs), as well as deposits for material procurement, the company explained.

The China Economic News (CENS) also notes that strong appreciation of the RMB in China will force many China-based Taiwan enterprises to close. CENS reports:

Sharp appreciation of renminbi is expected to trigger a major shakeout among Taiwanese-invested enterprises in China, possibly forcing one third of Taiwanese firms in traditional lines to close shop, while allowing those with solid strength to land even more orders in two years later after experiencing the ordeal this and next year, said Lin Chin-chang, chairman of the Humen branch of the Taiwanese Chamber of Commerce in Dongguan, Guangdong Province, yesterday (April 10).

CENS continues,

As a result, Taiwanese firms in Dongguan area may fold at a rate of 20-30 per month, up from 2-3 last year, according to Lin. Xie Qingyuan, vice chairman of Taiwanese Chamber of Commerce in Donggouan, noted that Taiwanese makers won`t be able to take any order should renminbi`s exchange rate climb to US$1=6.5 yuan.

Hopefully some of these companies will survive. Especially hard hit will be the textile industries. Maybe they can hold firm in this economic shake-up.

Article 1: Motech net profits eroded by exchange losses in 1Q08
Article 2: Numerous Taiwanese Firms in China Likely to Fold on Sharp Revaluation of Renminbi

Gou Tai Ming (Terry Gou)

So I will be doing a thesis over the next year looking at some elements of the Taiwan Hi Tech industry. Saw a great 2007 article about Gou Tai Ming, the founder of Hon Hai Precision Technologies.

Hon Hai's revenue has grown more than 50% a year in the past decade to $40.6 billion last year. It is expected to add $14 billion in revenue this year. That is roughly the equivalent of Motorola's adding, within a year, the sales of CBS Corp.

Throughout his company's rise, the 56-year-old native of Taiwan has maintained a low profile. Publicity, he says, risks helping competitors and alienating customers. "I hate that I [have] become famous," Mr. Gou said in a recent three-hour interview at Hon Hai's Taiwan headquarters. It was Mr. Gou's first interview with Western media since 2002, following more than five years of requests by The Wall Street Journal. "We are so big we cannot hide anymore."

For anyone interested in the Taiwan Hi-Tech industry, the article is definitely worth the read. Link is below.

(Article: The Forbidden City of Terry Gou)

Overview of Taiwan Semiconductor Industry

I was just reading the 2007 Taiwan Semiconductor Industry Overview issued by The Taiwan Semiconductor Industry Association (TSIA). The overview takes a look at the Taiwan semiconductor industry in 2006. Slightly dated but still interesting. Here is a snippet from the report:

Semiconductor market of Asia, the fastest-growing area, reached US$116.5 billion in 2006, a 12.7% increase from 2005. Taiwan semiconductor industry grew 24.6% in 2006, outpaced the worldwide average of 8.9% due to the dramatic growth of 30.5% in Taiwan manufacturing sector, with 17.2% increase in foundry and 52.8% increase in DRAM.

Taiwan IC revenue (including design, manufacturing, packaging, and testing) totaled NT$1,393.3 billion, a 24.6% growth from 2005, with NT$323.4 billion in design, a 13.5% increase, NT$766.7 billion in manufacturing, a 30.5% up, NT$210.8 billion in packaging, an 18.4% up, and NT$92.4 billion in testing, a 36.9% rise.

In 2006, Taiwan IC product revenue reached NT$652.3 billion (Table 1), a 30.7% increase from 2005. Memory products comprised 52.2%, up from the 48% of 2005 due to the stabilized price. Information applications, comprising 59.7% (59.2% in 2005), remained the largest application area. Consumer applications comprised 27.8% (29.1% in 2005), and communication ICs accounted for 11.4% (10.5% in 2005).

As soon as TSIA release the 2008 version the reviews 2007, I will let you know.

Vietnam the new Promised Land

With rising labor costs in China and a reduction of tax incentives, Taiwanese companies are increasingly looking to other places to setup manufacturing plants. CENS reports that most large Taiwanese EMS (Electronic Manufacturing Services) are moving to Vietnam where labor costs are 40% to 50% lower than in China. These companies inlcude Hon Hai Group, Compal Electronics Inc. and Wistron Corp., who, according to CENS, "have gradually moved to build production plants there, according to company sources."

(Article Link: Taiwan`s Leading EMS Makers Move to Set up Production Lines in Vietnam)

Nvidia vs. Intel

After competing aggressively and successfully with AMD and VIA, Intel are now aligning their sights on Nvidia by challenging Nvidia's core strength: graphics technology.

Most observers agree that the graphics processing unit (GPU) is gaining on the central processing unit (CPU) as the single most important piece of silicon inside the PC. "When you start looking at a PC today, the (central) processor means less and less," according to Jim McGregor, an analyst at In-Stat. The GPU is simply becoming a better way for PC makers to differentiate in a landscape dominated by Intel CPUs, he said.

The question is, who is going to be the largest provider of that differentiation and what form will it take? The pressure on Nvidia--expressed by Huang on Thursday at an analyst meeting--is understandable, as the company seeks to fend off both Intel and AMD, who are increasingly focused on graphics, said McGregor. "Nvidia faces serious challenges. One of their big customers (AMD) went out and acquired a competitor (ATI) and then (you have) Intel saying we're going into your territory." That has put Nvidia on edge. Intel, not surprisingly, is the biggest threat.

Interestingly Nvidia is teaming up with VIA and jointly developing a platform based on VIA's Isaiah chipset:

...to effectively do battle with a circa-2009 Intel that excels in both central and graphics processing and AMD-ATI, Nvidia must seek new partners. It is turning to one of the only other--aside from Intel and AMD--x86 processor suppliers to build an alternative PC platform. Billed as "The World's Most Affordable Vista Premium PC," the sub-$45 processing platform will combine Via's Isaiah processor with an integrated Nvidia graphics chipset.

So, let the games begin....

(Article: Nvidia does battle with Intel, Moore's Law)

3,500 Movies on an MP3 Player

Welcome to racetrack memory. A new memory method being researched and touted by IBM. The real benfit to this type of memory is the lack of moving parts therefor increasing the durability and the lifetime of a memory disk. One IBM fellow has said:

Aside from performance, better relability and lower prices could be on the way, too. Unlike magnetic disk drives, racetrack memory has no moving parts. Moreover, unlike flash memory, it can be endlessly rewritten with no wear and tear.

Apparently IBM researchers "have managed to store information in columns of magnetic material, or 'racetracks,' arranged either perpendicularly or horizontally on the surface of a silicon wafer." This is done "through a nanotechnology technique dubbed 'spintronics,'" that uses the "'spin' of the electron to store data."

I am personally all for crash-proof disks.

Article Link: IBM creates 'racetrack memory' for faster and cheaper storage
IBM Press Release: IBM Moves Closer to New Class of Memory