A number of Taiwanese computer manufacturers have started low-cost PC production lines in a bid to tap into the new niche market, but industry watchers said the prospects for the sector may not be as rosy as they seem.
"Low-cost computers, along with desktops and notebook computers, will become the three most important product segments in the future of the PC industry," said Jerry Shen (沈振來), a deputy general manager at Asustek Computer Inc (華碩電腦), at an investor conference last Monday.
Asustek, the world's largest motherboard maker, is set to produce its first batch of budget PCs running on Intel Corp's Classmate PC platform in July, which consist of a low-cost PC design and chips that support a wireless Internet connection.
PHOTO: AP
The company will contract manufacture the PCs for Intel, as well as making them for its own Asus brand.
Total Classmate PC shipments are set to hit 10 million units next year and those made by Asustek will account for as many as 5 million, Shen said.
In July, he said Asustek will roll out four own-brand budget PCs -- tentatively called Easy PCs -- with price tags ranging from US$249 to US$549.
The machines will employ Intel's Solid State Disk with flash memory from 1 gigabyte to 40 gigabytes, instead of the standard mechanical hard drive. And the 7-inch panels will be sourced from AU Optronics Corp (友達光電), Asustek said.
Elitegroup Computer Systems Co (精英電腦), another of the nation's first-tier motherboard makers, will also manufacture contract Classmate PCs, with shipments expected to start in the third quarter, mainly to the Chinese market.
"The low-cost PC sector will enable Taiwanese computer makers to secure market share, judging from the large volumes expected to be produced each year," said Sean Ryan (蕭文良), a researcher with Fubon Securities Investment Services Co (富邦證券投顧).
But it doesn't mean that all the players would secure a solid foothold in the market by rushing into production, he added.
Only those with economies of scale and excellent control of their supply chain would survive and take a controlling share of the market, he said.
For Quanta Computer Inc (廣達電腦), the world's largest contract notebook computer maker, the One Laptop per Child (OLPC) project will only strengthen its market leadership.
Quanta announced on April 26 a delay in shipments until the fourth quarter from the third quarter, caused by changes to components, including a faster central processing unit and a larger hard drive and memory, it said.
The OLPCs will cost US$175 per machine, with Quanta taking a profit of US$3 per machine, Nicholas Negroponte, the former director of the Massachusetts Institute of Technology Media Lab who now heads the nonprofit OLPC, said last month.
The profit is less than what Quanta receives from its mainstream PC business, but it would still be a lucrative unit if the first-year shipments reached 10 million as projected.
But industry watchers remained skeptical on whether these low-cost projects would really take off.
Some of the countries importing the PCs want to have an OLPC assembly line set up within their borders, to create local jobs, said an analyst who requested anonymity.
Managing sales channels for the PCs would be another challenge, he said.
"The distribution of budget computers will not be via conventional distributors or resellers. It will involve the government or large domestic enterprises, which is a totally different ball game," he said.
Despite the hype, Quanta's smaller rival, Compal Electronics Inc (仁寶電腦), has decided to pass on low-cost PCs.
"Low-cost notebook computers are not our focus," Compal spokesman Gary Lu (呂清雄) said.
The average price of portable computers has been on a downward trend over the past few years, and has now fallen to a comfortable level for most consumers, he said.
"Children in these countries are waiting to fill up their stomach, not play computers," he said.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors