Tablet Growth Changing Supply Strategies

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In 2012, shipments of tablet devices is expected to rise by 75% while shipments of notebook PCs are slated to rise just 2% and decline by 28% for mini-notebooks. We noted earlier this week the impact of more tablet shipments on prices for display screens, and now NPD DisplaySearch points out some changes in the supply chains for PC and tablet makers.

According to DisplaySearch, LG Display Co. Ltd. (NYSE: LPL) provided more than one-third of Apple Inc.’s (NASDAQ: AAPL) iPad screens. Apple tablet shipments accounted for 84% of all tablets shipped in the second quarter of 2012. Hon Hai Precision Technology Ltd. (aka, Foxconn) manufactured 84% of Apple’s iPads, and Quanta Computer Inc. manufactured the rest.

Quanta also manufactured the largest portion of mobile PCs for Hewlett-Packard Co. (NYSE: HPQ), the firm that shipped the second largest number of mobile computers in the second quarter, and began manufacturing the 7-inch Nexus 7 tablet for Google Inc. (NASDAQ: GOOG).

DisplaySearch anticipates that “competitive conflicts” could disrupt the mobile PC supply chain that currently exists. An analyst gives Samsung as an example:

Samsung Display plans to improve its mobile PC customer portfolio by reducing its share in Apple and increasing support to captive brands and other external customers, like Amazon and Barnes & Noble.

Another shift will be the move to touch-screen notebooks and ultra-slim devices, where Apple’s competitors have a better chance at capturing market share and will be placing larger orders on suppliers for the components they need at the lowest possible cost. DisplaySearch’s analyst again:

With 2013 business planning well underway, product portfolios, sales strategies, and sourcing plans for mobile PC brands will certainly impact the supply chain. … Looking ahead to 2013, business plans for the top 10 PC brands are set higher, with a 16% Y/Y shipment increase on average for notebook PCs. Tablet PC growth will remain strong, but may be less impressive than in 2012.

Paul Ausick

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