Although the production capability of China-based notebook ODMs is still too small to make a significant impact on their Taiwan-based counterparts, the notebook supply chain in China stands a chance of expanding their presence in the global notebook industry.
Most notebook vendors and makers in the supply chain have lowered their shipment targets for 2015 as they have tuned conservative about the second half of the year after experiencing lackluster sales performance in the first half.
Taiwan-based notebook ODMs are also conservative about the business prospects for the second half of 2015 as the two local brands Acer and Asustek Computer have been slow in releasing orders.
Taiwan's ODMs are also worried that some notebook brands may place orders with China-based ODMs as the brand vendors may seek to maintain their market share and profits by switching orders to suppliers which can offer more competitive prices.
LCFC (Hefei) Electronics Technology and a computer branch (translated as Zhihe Information) of Tsinghua Tongfang are currently the two major notebook ODMs in China. LCFC, a joint venture established by China-based Lenovo and Taiwan-based Compal Electronics, has a capacity to ship about 20 million notebooks a year, while Zhihe is able to ship two million a year.
Facing a gloomy outlook for the second half, Lenovo is expected to ramp up the ratio of notebooks produced in house, while reducing its orders to Taiwan-based ODMs, notably Wistron.
Zhihe has managed to ramp up its shipments of ODM notebooks from the previous one million units a year to the current two million, a capacity which is less than the monthly shipping capacity of any of the Taiwan-based top-four ODMs.
However, the increasing shipment from Zhihe indicates that some notebook brands have been courting the China-based ODMs for production of price-competitive models.
Zhihe reportedly has landed ODM orders from Acer with delivery to begin in 2016, but it remains to be seen if Zhihe can win more orders from other brands.
