Industrial PC sales rise

China Economic News (CENS) reports both Adlink and Winmate, two industrial PC manufacturers, have had strong sales in Q2. CENS says

Taiwan's leading manufacturers of industrial personal computers, including Adlink Technology Inc. and Winmate Communication Inc., posted outstanding sales in the first half of this year.

After acquiring the U.S.-based Ampro Co. several months ago, Adlink saw quarterly sales break the NT$800 million (US$26.4 million at US$1:NT$30.3) mark in the second quarter of this year. The company saw overall sales exceeding NT$1.3 billion (US$42.9 million) in the first half of this year, up a whopping 36% year-on-year from NT$975 million (US$32.17 million). Winmate saw second-quarter sales reach NT$395 million (US$13.03 million), hitting a historic high for nine quarters in a row and up 47.2% year-on-year.

Since I work in the IPC industry this should be good news for me and the company I work for. Perhaps! However the reporter fails to mention how much of Adlink's growth is directly attributable to Ampro. It would be good to see the breakdown of Ampro sales and Adlink sales and see where the actual increases are being derived! I do believe Adlink will benefit from both economies of scale and scope with their acquisition of Ampro but I would be interested to see how the sales are being broken down between the two companies.

To emphasize this report, while the the Taiex slumped 1.21% today, the share prices for many IPC companies were up by more than 2%. IBASE led the way with a greater than 6% increase in the share price. Adlink went up 2.99%.

Article: Industrial PC Firms Achieve Brisk Sales in Q2

Atom Processors and Industrial PC

The Atom processor has changed the PC landscape. Low price PCs are becoming increasingly prevelant. People don't need the computing power of high-end processors so why pay for the excess capacity. The industrial PC sector is especially attuned to price. IPC customers usually buy embedded systems to be used for a single purpose e.g. being installed in a kiosk or digital signage player. They therefore don't need the full power of a normal processor. The impact the Atom processor will have in the IPC industry is uncertain at best.Will IPC profits fall? Maybe! Digitimes doesn't seem to think so:

Recent market reports that Intel's Atom standard platform has dropped below US$100 have prompted speculation that the new platform could have a possible impact on IPC (industrial PC) makers' profits. But sources at IPC makers have pointed out that although the standard platform could have an impact on the market, the affect will be limited.

The main selling point of IPCs is customization, therefore no matter how cheap the atom standard platform becomes, it will still face difficulties when competing against products developed by specialist companies who are able to add additional value to their products, the makers contended.

IPC makers said they may consider adopting the Atom standard platform for offerings to the system integrator (SI) or international trader market segments, which give priority to low-pricing, however, these buyers will face possible risks down-the-road if Intel decides on a lower than average life-cycle for the platform.

Some IPC makers are already developing Atom based platforms. It will be interesting to see how these products pan out and what the market up take is. For now I guess it is a wait and see game for the IPC industry.

Article: Low price Atom standard platform to have limited impact on IPC makers

Advantech Buying BCM Embedded

Advantech is, according to China Economic News (CENS), set to buy a controlling stake in BCM Embedded, a motherboard distributor.

To accelerate the development of dual-branding strategy, Advantech Co., one of Taiwan`s major manufacturers of industrial computers, will merge with BCM Embedded Computer Inc. through its fully-owned Advantech Fund A by the end of June.

Advantech Fund A has a 50% stake in BCM which focuses on distribution of industrial motherboards. In mid-June, Advantech director board passed a proposal to increase investment of NT$200 million (US$6.6 million at US$1:NT$30.3) in Advantech Fund A to take controlling stake in BCM, which will become Advantech`s distribution unit after the merger. Advantech will continue to engage in M&As at home and abroad, with the effect of the M&A to show sometime in 2009.

It seems M&A are all the rage this year in the IPC industry. Earlier in the year Adlink bought out Ampro. The number of companies in the sector are getting smaller for sure and IPC companies are, out of neccessity, becoming more and more vertically integrated.

Article: Advantech to Merge With BCM Embedded Computer by June End

Industrial PC Companies Continue to Shine

China Economic News (CENS) reported industrial PC (IPC) companies posted impressive sales in April. CENS says:

Taiwan's industrial computer makers, including IBASE Technology Inc., Winmate Communication Inc., ICP Electronics Inc. and ADLINK Technology Inc., all enjoyed shining sales records for April, according to company sources.

IBASE has benefited from an influx in orders for the card dealing machines from Casinos around the world. Winmate has managed to generate significant orders for their digital signage solutions and ICP Electronics has secured strong orders for lottery machines. Investors predict ICP Electronics will have April sales of around NT$359 million and that these sales will further increase when the new plants in Shanghai come on line in the next few months. Adlink has also had a revenue growth mostly due to a growth in orders in Taiwan and Europe.

Since I work in this industry, I really hope it continues to prosper.

Article: Taiwan`s Industrial Computer Makers Post Shinning Sales Records for April

Interview with Adlink GM P.J. Go

In an Embedded Computing interview Adlink's general manager P.J. Go describes the motivation behind Adlink's recent acquisition of U.S. based Ampro:

The main reason we wanted to buy Ampro is because the company plays very strongly in the U.S. Military, aerospace, and medical markets. We have had fairly limited success penetrating those markets here in the United States. In addition, Ampro gives us a great revenue base in the United States. Our U.S revenue will represent 35 percent of the company’s total revenue, instead of the 15 percent that it represented previously.

Ampro also adds to our toolkit expertise in extended temperature and the shock and vibe specs required by the military and aerospace market. Ampro is used to building boards that can go from -40 ºC to +85 ºC for operating temperatures. ADLINK had been doing -20 ºC to +70 ºC or usually, 0 to 50 ºC.

Of course, as noted earlier, this makes Adlink the third largest IPC provider in Taiwan behind Advantech and ICP Electronics.

This horizontal merger is classic product and market diversification through merger and acquisitions (M&A). Many companies do this so as to develop better positions in foreign markets, to secure more reliable distribution networks in new markets and to purchase new expertise and product lines. Clearly Adlink are hoping to learn how to develop more durable systems. One of the biggest challeneges for Adlink will be cross-cultural management. Despite this, this acquisition seems to be a big win for Adlink. However, as with most M&A, only time will tell.

Interview: A few minutes with ADLINK’s PJ Go and Jeff Munch

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

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

Industrial PC Share Prices Up while Markets Slide

The worst job report for a number of years in the US led to a slump in all the major US indices on Friday. According to the report 63,000 jobs were taken away in March. Of course, since the US markets tumbled on Friday, most of the Asian markets (with the exception of Hong Kong) went down today.

The Malaysian Market led them down dropping more than 9%. Australia was down 1.74%, Shanghai down 3.59%, Jakarta down 4.73%, the Nikkei down 1.96% the Straits times down 1.02% and the Seoul Composite down 2.33%. Taipei’s index was down 2.72% at the close.

(Asian Market Indices for March 10, 2008, Source: Yahoo Finance)

Despite these dramatic declines, the share prices for most industrial PC (IPC) companies listed on either the Taiwan Market or Over the Counter Market went up. The only one to go down (and only by 0.85%) was Advantech. ICP Electronics rose by 3.36%, DFI by 2.74%, Axiomtek by 3.14% and IBASE by 3.19%.

(Industrial PC Company Share Prices in Taiwan, March 10 2008)

These rising share prices may indicate the nature of this market. Most of their clients (system integrators and system developers) plan their projects on a one to three year time scale. The IPC companies are therefore assured of revenue streams in the future and are less exposed to short-term fluctuations in the economies.

I have no doubt that if the indicators remain bad the system integrators and developers will need to cut back on their expenditure. This would then lead to declining share prices for the IPC companies.

Here’s to hoping they carry on rising tomorrow!

IPC: The week that was (March 7, 2008)

A brief summary of the happenings in the Industrial PC world over the past week:

5-03-2008:-Kontron AG announces Quanta will acquire a 21% stake in Kontron Asia Inc. the production organization of the Kontron Group.

4-03-2008:- Gaming products are anticipated to increase DFI's revenues by 40% with their largest client being International Game Technology (IGT).

3-03-2008:- Shipments and bookings of IPC products for the were up in January. EMSNow reported: "Rigid PCB shipments are up 5.6 percent and bookings are up 13.7 percent in January 2008 from January 2007. The book-to-bill ratio for the North American rigid PCB industry in January 2008, however, slipped to 0.97."

29-02-2008:- Adlink aims to become the second largest IPC maker in Taiwan with anticipated revenues mostly coming from industrial automation product lines and embedded-computing controllers applied to medical care, transportation and general engineering.

29-02-2008:- Kinpo Electronics is moving into the IPC field. Kinpo is traditionally an OEM manufacturer of printing/imaging devices and consumer electronics. Their first shipments will be system IPC products.

28 PCI Express (PCIe) lanes on a single board

My company, IEI Technology Corp., is in the process of releasing two standard single board computers (SBC) in different form factors that each have access to 28 PCI Express (PCIe) lanes. (OK I'm punting my company's product but they do pay my salary and, if sales are good, give us bonuses!).

In industrial computing, expansion is critical. Having many expansion options enables a single system to be connected to large number of expansion cards or devices enabling the system to manage more applications or carry out more tasks.

However, most SBC (and specifically PICMG 1.3 form factor CPU cards) typically provide a maximum of 20 PICe lanes. Applications that required more than 20 PCIe lanes would typically use server grade motherboards. However, even though these applications require significant expansion, they do not neccessarily require the processing power of a server processor. Therefore developing solutions for these applications are expensive and wasteful of resources.

Recognizing this as an oppotunity, IEI has released two SBC with 28 PCIe lanes. The first was a PICMG 1.3 CPU card, the SPCIE-3600AM2, and the second was an ATX motherboard, the IMBA-3600AM2. These boards are especially apt for machine vision applications where large data streams are transmitted to and from the cameras.

Both SBC come with a NVIDIA MCP55Pro (NFP-3600) system chipset, support AMD Socket AM2 Opteron, Athlon 64, Athlon 64 X2 and Sempron processors and 1.0 GB DDR2 memory modules.

Anyway, I thought these products were pretty cool and thought I would share. Let me know what you think.

Introduction to PICMG 1.3 : The new PICMG 1.3 specification (PDF link)
ATX Form Factor: ATX
Introduction to PCIe: An Overview of the PCI Express Standard

Can Adlink become Taiwan's Second Biggest IPC Maker

An article on Digitimes suggests Adlink wants to become the second largest Industrial PC (IPC) manufacturer in Taiwan. Since I work for an IPC company myself this article is interesting. The IPC industry is a very unique, niche industry and the current giants, Advantech and Kontron, continue to do well in innovation and ICP Electronics continues to grow with their IEI Technology Brand. Advantech have recently restructured their own organization and continue to lead the field.

From the article it does seem that Adlink are moving into systems as most IPC companies are now. Most IPC companies started out as industrial motherboard manufacturers and have evolved into systems development. Some of the bigger application areas include Medical PCs, Panel PCs, digital signage and point of sales (POS) machines. Most significant IPC companies are moving in that general direction. It will good to see how the competitive IPC environment plays itself out over the coming years.

Digitimes quotes company chairman James Liu as saying:

"The planned large growth in consolidated revenues will come mainly from industrial automation product lines and embedded-computing controllers applied to medical care, transportation and general engineering."

(Original Article: Adlink aims to be second largest Taiwan-based IPC maker)