Apr. 11, 2001

While Taiwan IT manufacturers' business outlook seems to be generally optimistic, if one follows opinion polls among exhibitors returning from CeBIT Hannover, one industry decidedly can be singled out as setting the pace: notebook computer manufacturers are the newsmakers of the week in Taiwan.

Bluetooth technology, the short-distance wireless transmission standard which has received the most attention, will soon be an important accessory in notebook PCs. Quanta Computer, Acer Computer, Mitac Technology, and Asutek Computer, hoping to meet demand from OEM clients and stimulate the market with new applications, announced to start mass manufacturing of notebooks with built-in Bluetooth modules from the third quarter of this year.

Supported by industry heavyweights like Intel, Ericsson and Toshiba, Bluetooth technology was actually born a long time ago, bug limited ability of Bluetooth module makers to deliver have also limited their entry into various fields of IT technology. Furthermore, still high chip prices and the uncertainties of driver program compatibility among different Bluetooth applications are two other impediments to Bluetooth technology prevalence in the market.

However, notebook makers contend that in terms of transmission speed, distance or user demand, the notebook computer is the most suitable system platform for Bluetooth technology applications. They expect, as long as Bluetooth notebook PCs hit the market, mobile phones, printer, digital cameras and other IT products will become able to work with at least notebook PCs.

Development of price situation and China market

International PC companies, all buying their branded products from Taiwan OEMs, have been pushing them to enter China. The earthquake of September 21, 1999, which also damaged IT factories, taught the companies the importance of diversifying their manufacturing locations.

But the fall in notebook prices is the main reason behind the urgency. According to analysts, low-price models will be the main trend this year, and therefore international companies are hoping to control costs by moving production to China, to have a better chance to succeed compared to Japanese and South Korean manufacturers. Additionally, the Chinese economy is exploding at a pace that developed nations cannot compare to, creating a consumer market with immense potential.

Consequently, the Taiwan government is expected to soon lift restriction on Taiwan notebook manufacturers moving production to China. However, this will mainly have an impact on exports. Insiders say that the transportation and distribution networks in China are still underdeveloped, and that therefore notebook manufacturers investments in China will have little impact on the local market in the next to two years.

The Chinese government understands it has a booming market and advantage in human resources but lacks experience in technological and market development. Hence, foreign companies must purchase a certain amount from China before receiving distribution rights in the mainland, according to Chinese regulations. Taking this into account, as well as the complicated Chinese customs procedures and the poor local logistic and distribution systems, foreign notebook companies will have a very difficult time transporting the different components for assembly in China.

Delivering finished products is another big problem in China. Currently, most of the notebook plants are located in the Shanghai region, but the shipping industry development there is at least two years behind Hong Kong