China ODMs Increasing as Vendors to Cut Costs

Low-priced, high-specification handsets are continuing to be focus for handset vendors in China, with Xiaomi, Coolpad and Huawei Device expected to push segment in 2015 in order to combat competition from international vendors.

Handsets sized around 5-inch, equipped with Full HD panels and the latest processor technology with a price tags of CNY1,999 (US$326) are expected to be the focus of handset vendors in China. Many of the handsets already have 440-534ppi and are half the price of iPhones as vendors look to attract more customers in China and abroad.

As this trend occurs, supply chains in Taiwan are seeing increased pressure to drop quotes, and price wars have become the new standard among panel and touch panel makers throughout Asia.

Vendors such as Huawei and Xiaomi are looking to optimize design and R&D development as well as save on personnel costs in order to expand their handset lineups and increase profits. To achieve this end, the vendors are increasing lies with local ODM services which allows them to secure higher volumes in shorter time frames. This in turn is boosting the grow of China's handset ODM ecosystem.

In the past China ODMs were mainly focused on design but now offer more vertically integrated solutions including production, giving vendors an upper hand in the market in regards to time-to-market and technology pricing. These solutions are also what is giving handset vendors in China advantages over competitors and are also likely to benefit local vendors as they expand into markets abroad, most notably in Africa and India.

Meanwhile, demand for LTPS solutions is expected to increase in China during 2015 and the global proportion of small- to medium-size TFT LCD production capacity from China is expected to increase to 35% in 2017, up from 15.5% in 2011, according to recent findings from Digitimes Research.