3Q NB shipment growth lower than 5 percent for order cut

TAIWAN: The July revenue of PC vendors are beyond consensus due to the weak demand. According to DRAMeXchange, the research division of Trendforce, 3Q NB shipment QoQ will be lowered to below 5 percent from 12.8 percent given the slow recovery for European and American market and order cut from OEMs.

According to DRAMeXchange, the US economy is still sluggish, while the European economy is still in the trough. China has outperformed other regions but merely meet the consensus. PC-OEMs cuts order to meet the current demand and inventory level. DRAMeXchange also adjust down the 2010 NB shipment to the level less than 195 million units. Shipments in 2H10 will likely be tied to the shipments in 1H10.

Most OEM and ODM show the conservative view and wait for the demand in end of August. Despite the 70 percent MoM growth from Acer in August, DRAMeXchange believes that it is due to the different shipments recognition for different vendors. The real demand still needs to be determined from channel sales.According to EnergyTrend, the research division of Trendforce, the battery industry is highly correlated to notebook industry and also impact by the slow notebook shipment in 3Q10.

Individual notebook needs 7 to 8 cell battery and Taiwan battery vendors are mainly focused on notebook batteries. That is, 3Q10 performance of battery vendors will remain flat or mild increase and less visibility in 4Q10. The situation will not be re-shaped without the key component shortage in 4Q10.

The competition from EMS will also accelerate the pricing pressure. According to DRAMeXchange, OEMs are more willing to allocate order to EMS in 2011 and competition between EMS and ODM will drag down the industry margin. EMS will rapidly increase the market share in leverage of excellent capability in component integration.