The landscape of the global OEM AIO (all-in-one) PC market will undergo a dramatic change in 2016 as number-two maker TPV-Inventa Technology begins making its gradual exit from the segment, according to Digitimes Research.
Asia Vital Components (AVC), a supplier in Lenovo's PC supply chain, and Compal are expected to benefit the most from the exit, though Inventec - the parent company of TPV-Inventa - will also pick up some orders
Both TPV-Inventa and Compal were manufacturing partners of Lenovo and Asustek. But while Lenovo will shift the bulk of its TPV-Inventa orders to AVC - though some will go to Compal - Asustek will shift most of its orders to Compal. Overall, Compal's AIO PC shipments are expected to grow a dramatic 56% on year in 2016.
However, Quanta Computer will continue to be the top OEM/ODM maker for AIO PCs in 2016 thanks to orders from Apple. The maker will account for 35% of global OEM AIO PC shipments, which are expected to approach 13 million units in 2016, according to a Digitimes Research forecast.
PTV-Inventa, which held a 16.5% share in the segment last year, is expected to see its AIO PC shipments decline to below 900,000 units in 2016, representing a drop of 62% from 2.37million units shipped one year earlier.
Pegatron Technology, Wistron and Compal Electronics will each account for a 10-13% share.
AVC is expected to snap up a total of 1.2 million AIO PC orders from Lenovo in 2016. While the increased orders won't make AVC become a major player in the AIO industry, the company will become a more competitive second-tier maker.
AIO partnerships fraying amid falling shipments
In October 2015, Digitimes reported that Inventec raised its stake in TPV-Inventa - its all-in-one PC manufacturing joint venture with TPV - to 90%, up from an original stake of 49%, as TPV began souring on a shrinking market that was more suited to PC makers than display players. At the time, Inventec noted that while the AIO market was a tough market to succeed in, the company remained optimistic about the product line. TPV-Inventa had already turned profitable in 2014 and its AIO shipments in 2015 were a record high 2.37 million units, despite the overall market shrinking 5% on year.
However, Inventec soon had to face another setback - the petty jealousies and betrayed loyalties that govern the contract manufacturing industry. TPV-Inventa had been a manufacturing partner of Lenovo in the AIO market. Meanwhile in the notebook market, China-based Xiaomi decided it would enter into the 2-in-1 device (tablet and notebook hybrid) business - the vendor is scheduled to release a 12.5-inch and a 13.3-inch 2-in-1 device in June or July, priced beginning at US$499. This maneuver will bring Xiaomi in direct competition with Lenovo, which is not pleased with the increased competition it faces. Feeling betrayed by Inventec, Lenovo decided to gradually shift its orders away from TPV-Inventa to other makers.
From Inventec's perspective, it was becoming clear that the AIO market was just not worth the trouble, especially compared to opportunities in the notebook market. The scale of the AIO market is much smaller than the notebook market and shipments have been dropping on an annual basis over the past few years. Worldwide AIO shipments were 14.6 million units in 2013 and decreased to 13.3 million units in 2015 and are expected to decline further to reach 12.6 million units in 2016. Although the notebook market has also been suffering from declines during the past few years, shipments are still expected to reach 144 million units in 2016, down 8.5% on year.
Since Xiaomi has good brand recognition and stable sales channels in China, Digitimes Research expects Xiaomi's notebook orders to Inventec for 2016 to reach 600,000 units and the orders will boost Inventec's notebook shipments in 2016 to over nine million units, greatly narrowing its gap with Taiwan's fourth-largest notebook maker Pegatron.
As for profitability, the average gross margin for AIOs is about 5-7%, only slightly higher than the 3-4% makers see for notebooks, but the gap is not large. For Inventec, landing orders for notebooks provides more benefits.
As for TPV-Inventa, its shipments are expected to drop over 60% on year to total less than one million units in 2016 and decline further to 200,000 units in 2017 and the company will be completely out of the business by 2018.
TPV-Inventa's AIO PC clients include Lenovo, Hewlett-Packard (HP), Asustek and Toshiba. Lenovo will gradually shift its TPV-Inventa orders to AVC and Compal, while TPV-Inventa's orders from HP will be shifted up into parent-company Inventec in the second half of 2016, helping Inventec's AIO shipments reach 1.2 million units.
TPV-Inventa's partnership with Asustek will also end in the second quarter and Asustek will then shift those orders to Compal starting in the third quarter. The related shipments from TPV-Inventa to Asustek were around 200,000 units a year.
Lenovo warms to Compal and AVC
Digitimes Research explained that AVC first landed AIO orders from Lenovo in February 2016 but only for an estimated 300,000 units. However, with TPV-Inventa exiting the market, Digitimes Research increased the related shipment forecast to 1.2 million units and AVC will supply a total of four all-in-one PC models. In addition to the shifted orders this year, TPV-Inventa will also not receive any new orders from Lenovo in 2017, even though it will continue to complete its previous contracts with the vendor.
Overall, TPV-Inventa will still ship 600,000 AIOs to Lenovo in 2016 but AVC and Compal will be the China-based vendor's top AIO suppliers this year, accounting for 36% and 33% of Lenovo's AIO shipments, respectively.
AVC has a tight relationship with Lenovo, including partnerships for a number of different product lines, including servers. Lenovo is also aggressively nurturing AVC to become a major ODM partner.
As for Compal, its Lenovo AIO orders are expected to reach 1.3 million units in 2016, up 44% from 2015's 900,000 units. Added to that are the Asustek orders shifted from TPV-Inventa, totaling around 100,000 units. So for the year, Compal's AIO shipments are expected to reach 1.4 million units, up 56% on year.
