cens logo

Electronic Parts Makers See Lukewarm Demand in Q2, 2013

Oct 04, 2013 | By Steve Chuang

Sluggish PC sales and Apple product hit shipments in 3C segment

Demand for Taiwan-sourced electronic parts and components used in 3C (computer, communication and consumer electronic) devices cooled in the second quarter of the year for a variety of negative market factors, including a major product transition by Apple before September and slower-than-expected growth of ultrabook sales, according to Industry & Technology Intelligence Service (ITIS). Demand in non-3C segments ended the quarter in comparatively good shape, the market research unit added.

The latest ITIS report shows that the industry's overall output totaled NT$216 billion in the quarter, up 7.5% quarter-on-quarter (QoQ) and 3.5% year-on-year (YoY).

LEDs contributed NT$25.7 billion to the total, representing a 12.5% increase from a year ago, and a 26% from a quarter earlier, mostly thanks to strong markets for backlight and general lighting applications.

Output by passive component manufacturers reached NT$28.9 billion, soaring 13.8% QoQ and 11.1% YoY, mainly on stronger inventory draw by downstream manufacturers in the quarter, compared to the first quarter, especially in the sectors of communication devices, computers and information technology applications.

The printed circuit board (PCB) sector finished the quarter with a modest quarterly growth of 3.4% in output of NT$100.5 billion, to which ITIS attributes a tepid global consumer market that held back restocking by downstream manufacturers, despite some new smartphone model launches.

Due to Apple's reported product transition before September, as well as weaker-than-expected sales of ultrabook PCs, most Taiwanese connector manufacturers in this segment reported lackluster performance, ITIS said. By comparison, makers serving the electric vehicle, renewable energy, medical instrument and network devices enjoyed strong growth, helping the sector to maintain 3.1% QoQ growth in the second quarter.

Output of power supply components in the second quarter amounted to NT$25.1 billion, up 8.3% QoQ, but down 11.9% YoY, mainly due to delayed product launches by some U.S. customers.

Threats and Opportunities
ITIS noted that an increasingly competitive global market poses both treats and opportunities for Taiwan's electronic parts and components industry. Among emerging threats are the aggressive rise of Chinese firms, such as BYD Electronics (International) Co., Ltd. and Wanlida Group Co., Ltd., particularly in market for contract manufactured mobile devices.

BYD Electronics has expanded its contract manufacturing business recently, winning orders for mobile Internet devices from HTC, Nokia, Samsung, BlackBerry, Huawei, Sharp, Dell and Acer, while Wanlida has ambitiously grown in the low-to-middle-end market for local brand tablet PCs.

ITIS predicts that progress by Chinese firms will threaten the competitive standing of Taiwanese suppliers in the near future. If Chinese contract manufacturers continue to grow and forge closer ties with local world-class brands, such as Lenovo, ZTE and Huawei, Taiwanese companies could have little room to compete on a cost basis. ITIS adds that consolidating business ties among Chinese companies is expanding to the downstream sectors of connectors and other applications, stealing business from Taiwanese connectors makers.

More bad news came to Taiwanese manufacturers is an announcement made by Intel, the world's biggest maker of PC processor units and chipsets, that it would slash its revenue forecast for this year as PC demand dwindles.

Intel reported a revenue growth of only 2% in the second quarter of this year and expects sales to be flat for the year. The firm has also decided to cut capital spending for the year by US$1 billion to US$11 billion, raising concerns that the global PC market could worsen in the second half of the year.

ITIS notes that since Taiwan is world's major supplier of PC parts and components, including PCBs, passive components and connectors, the current gloomy climate following Intel expressing its pessimism about the global PC market will surely hit Taiwanese companies in the second half.

To counter the increasingly unfavorable competitive landscape and ensure sustainable development, ITIS advises Taiwanese connector manufacturers extend into non-3C product markets, such as automotive electronics and communication services. The market researcher also advises makers to acquire key technologies for RF connectors, antennas and fiber-optic connectors through buyouts and joint ventures to secure a competitive standing in segments with brighter prospects, such as internet of things and cloud applications.

ITIS sees another ray of hope for Taiwan connector suppliers in the global demand for enterprise-use cloud servers since server motherboards command a price premium over their lower-end PC counterparts.

Auto electronics is another lucrative market for Taiwanese connector makers. ITIS says that electronic parts and components used in cars call for higher specifications and involve longer testing and certification processes, resulting in better margins than comparable products for PCs.

In the power supply component market, ITIS expects local producers to benefit in future from the partnership formed by Bosch, GS Yuasa and Mitsubishi on June 16 to develop next-generation lithium batteries.

The three said enterprises will set up a joint venture in Stuttgart, Germany, to develop the next-generation battery, which will be mainly used in hybrid and electric vehicles. Bosch has a 50% stake in the venture, with GS Yuasa and Mitsubishi owning 25% each. The joint venture will provide technology and sales support to its parent companies and begin operating in early 2014 as part of Bosch and GS Yuasa's power battery business.

ITIS says that the joint venture is Bosch's second attempt to work on lithium batteries in cooperation with partners in Asia. The German firm pulled the plug on SB LiMotive, a four-year venture with Samsung, in September of 2012.

According to insiders, ITIS reports, research on next-generation lithium batteries is focused on electro-chemicals, needed materials and advanced battery management and production technologies to dramatically enhance the battery's energy density.

Uncertain Global Economy
As to the outlook for the third quarter, ITIS says it is still too early to tell if demand for budget-priced PC models in emerging countries can support growth momentum in the industry. A tapering of quantitative easing by the U.S. Fed signals a recovery of the U.S. economy but has seriously impacted emerging economies in Southeast Asia. On the plus side, Taiwanese parts suppliers are expected to enjoy tailwinds from the launch of new smartphone models by Apple, HTC and other global brands in the quarter, including a couple of middle-priced models targeted at emerging countries.

Amidst the mixed economic landscape, ITIS forecasts the industry's overall output to grow by 6.9% in the third quarter to NT$230.9 billion and post a moderate increase of 3.6% to NT$879.6 billion for the whole year. Over the longer term, however, slackening demand for PCs and a shift in smartphone sales growth to low-to-middle-end models will inevitably undermine the sector's profits.

Separately, the LED sector is estimated to see a 4.9% decline in output value in the quarter, due to shrinking market demand for backlight modules.

Despite a high season, the passive component sector's output is likely to show a lackluster growth of 2.5% in the third quarter, says ITIS, based on a sudden drop in Taiwan's export orders for June. The drop came despite an otherwise positive turn of major economic indicators for the month, including improvements in the industrial production index, manufacturing production index, exports, and imports of electrical equipment.

ITIS predicts that Taiwan's PCB output will grow by 6.1% QoQ to NT$106.7 billion in the third quarter, helped by back-to-school demand and inventory draw by downstream manufacturers preparing for the year-end sales seasons. The pace still falls short of the double-digit gains normally seen in the quarter.

ITIS also expects Taiwan's connector makers to post a 6.5% increase in output value in the third quarter, supported by new ICT products launches and stable global sales of consumer docking stations, hubs and embedded system applications.

In the power supply component segment, ITIS forecasts that makers will finish the third quarter with output value of NT$32 billion, up 27.8% QoQ, citing new ICT product launches as a major growth engine. For the whole year, ITIS has lowered its forecast of the sector's output to NT$121.9 billion, up 7.8% YoY.

Industry In-Focus

SINOSTEEL Corporation: Rising price in Steel</h2>

SINOSTEEL Corporation: Rising price in Steel

Jun 05, 2020

Brazil’s new crown pneumonia epidemic has rapidly increased. Brazil’s Vale, the world’s largest iron ore producer, is facing an out-of-control impact. The market is worried that iron ore production and sales will be affected. new highs. Experts from Sinosteel (2002) evaluated that steel prices will rise steadily under the effect of rising costs, with a promising outlook. According to a legal p...

Apple Invests Millions in LED Plant in Taiwan</h2>

Apple Invests Millions in LED Plant in Taiwan

Jun 01, 2020

Apple is considering to invest over US$330 million in a factory in northern Taiwan to manufacture both LED and micro-LED displays for its iPhones, iPads, MacBooks, and other new devices. Apple is teaming up on the new factory with Epistar, Taiwan's top LED producer, and Taiwanese LCD panel maker, AU Optronics. The plant will be located in the Longtan branch of the Hsinchu Science Park and Appl...

Taiwan Machinery Was Applauded in COVID-19</h2>

Taiwan Machinery Was Applauded in COVID-19

May 18, 2020

What the epidemic showed was the amazing flexibility of Taiwan's machine tool industry. Taiwan, which has allowed the semiconductor industry to specialize in the past, has finally realized that these machine tool industries with amazing strength are the "invisible champions" of Taiwan's economy. In early February, three companies -- Habor Precision, Tongtai Machine & Tool and Taiwan Takisawa -...

Industry Reports

K, the leading global plastic and rubber trade fair (Photo courtesy of Messe Düsseldorf/ctillmann)

K, The World's Leading Trade Fair for Plastic and Rubber Industry

Jul 24, 2020

2019 K Show, the leading global trade fair for the plastics and rubber industry, had been held in Düsseldorf on 16-23 October, 2019. There were 3,330 exhibitors from 63 nations proved impressively: plastics continue to be an innovative, indispensable material. But they also unanimously underscored the necessity of having operational circular economies along the complete material chain and to this...

Photo courtesy of CENS

Digital Healthcare & Technology at the Heart of Las Vegas CES 2020

Jul 14, 2020

■ Hubert Chih The number of healthcare exhibitors at the 2020 CES in Las Vegas increased significantly by 23% from 2019. According to the analysis and report by the CES organizer, digital healthcare and technology were the focus in the healthcare exhibition. In addition to the continued expansion of healthcare coverage, the reduction of healthcare costs, the improvement of effectiveness and th...

The Taiwan Hardware Show sees global buyer attendance. (Photo provided by Kaigo Co.)

Taiwan's Hand Tools Seeking Opportunities Amid Global Crisis

Jul 10, 2020

Due to the COVID-19 pandemic sweeping the globe, most of the international hardware shows slated for this year has been moved to 2021. However, as Taiwan’s efforts combating the new virus has proven to be successful, the 2020 Taiwan Hardware Show (THS) will continue as scheduled, beginning on Oct. 13 and ending on the 15th at the Taichung International Exhibition Center, thus becoming the only sh...

Supplier News

With professional technics and rigorous quality control, Kung Hsing gains high-reputation in the industry</h2>

With professional technics and rigorous quality control, Kung Hsing gains high-reputation in the industry

Jul 23, 2020

Kung Hsing Plastic Machinery Co., LTD., founded in 1972, is the brainchild of the company President Tsai Chin-lien’s over 48 years of experience in designing and producing extrusion machines. The firm stood by its belief to uphold integrity and offer the best quality and services, eventually becoming a leader in the extrusion machinery industry in Taiwan. Kung Hsing currently has two factories; t...




Jul 21, 2020

■ Tseng Lung-nan Intype Enterprise has built up 55 years of experience in producing extruders, though the firm is placing greater consideration on rapidly degrading of the global environment. In the past 20 years, Intype has become an active contributor to building up a global ecosystem, enabling them to reuse the products manufactured by their own extruders and avoid further waste. The firm t...


YFCM Carbon Fiber Driveshaft Lauded in the field of Modified Cars for its Flexibility </h2>

YFCM Carbon Fiber Driveshaft Lauded in the field of Modified Cars for its Flexibility

Jul 14, 2020

■Hsiao Yung-le Yifeng Technology Co., Ltd. specializes in the research and development of carbon fiber transmission shafts and the manufacture of carbon fiber related products.The carbon fiber material has the characteristics of lightweight, impact resistance, fatigue resistance, and corrosion, and chemical stability is quite high. The product type is increasing in the extensive range with an ...


Insiders' Views

Caption: Pictured from front row, third right, Changhua County Government Economic Affairs Department Director Liu Yu-ping, County Magistrate Wang Huei-mei, Secretary Chen Bo-tsun pose in front of the exhibition booth. (Photo provided by CHCIA)

Changhua County Government Shores up Biz-Matching to Global Buyers

Nov 18, 2019

■Yang Feng-Chun In a bid to assist manufacturers in Changhua County to expand their market reach overseas against severe competition in the globalized market, Changhua County Government has been an active player in pushing for a makeover and innovation of its local small and medium-sized enterprises. This is done in hopes of establishing stronger connection with international markets. An ex...

Paul Master offers high-quality chassis and engines parts for passenger cars, trucks, and industrial trucks. (Photo courtesy of Paul Master)

Paul Master Builds Reputation with Auto Chassis and Engine Parts

Nov 18, 2019

Founded in 1980, Paul Master Auto Parts Co. is headquartered in Taiwan, a professional manufacturer of chassis and engines parts for passenger cars, trucks, and industrial trucks including forklifts. General Manager Terry Liang said the company has its own professional design department, which provides customized products and specifications for global buyers, including automobile steering and...


Nan Hoang Traffic Instrument Co., Ltd.</h2><p class='subtitle'>Taiwan First brakes Technology Co., Ltd. </p>

Nan Hoang Traffic Instrument Co., Ltd.

Taiwan First brakes Technology Co., Ltd.

Sep 04, 2019

Nan Hoang Traffic Instrument Co., Ltd is one of the major manufacturers of automobile friction materials in Taiwan and globally. Chairman Austin Cheng has implemented the double-arrow strategy this year - own brand of “YangPo” is adopted to focus on global channels while the “NHC brand focuses on improving market shares in global markets, such as Europe, America, Asia, Australia, and the Middle E...

Exhibition Highlights

Koelnmesse (Beijing) Co., Ltd.

Announcement on Postponement of China International Hardware Show 2020 (CIHS 2020)

Jul 10, 2020

In view of the continuous spreading of COVID-19 all over the world and the latest epidemic prevention requirements of China and the government of Shanghai, in order to guarantee the health and safety of exhibitors, purchasers and professional visitors, China National Hardware Association and Koelnmesse have prudently decided to postpone China International Hardware Show 2020 (CIHS 2020) from Augu...

Automechanika Shanghai 2020 creates channels for cross-sector collaboration</h2>

Automechanika Shanghai 2020 creates channels for cross-sector collaboration

Jun 16, 2020

This year, Automechanika Shanghai continues to serve the entire automotive value chain by offering opportunities for information exchange, marketing, trade and education. Both vertically and horizontally, from OE, vehicle production to the aftermarket, it incorporates all elements of manufacturing, supply networks, services, new business models and information technology. Companies across the...

Messe Frankfurt (Shanghai) Co Ltd

CAPAS defers to 2021

Apr 20, 2020

Following the Chinese Government’s initiatives to prevent and control the COVID-19 outbreak, the organisers of the Chengdu International Trade Fair for Automotive Parts and Aftermarket Services (CAPAS) have announced the defer of the show’s 2020 edition. The fair, originally scheduled from 21 to 23 May 2020, will now be held from 20 to 22 May 2021. In China, the State Council issued an announc...