Taiwan’s seemingly ever-buoyant electronics industry was shaken recently when it emerged that one of the island’s leading computer manufacturers – Quanta Computer – has had to lay off 1000 employees as a result of the severe competition from Apple Inc. In addition to personal computers, display panels, DRAM, the solar energy and LED sectors are all suffering a serious over-supply problem. The Commercial Times questioned what is to become of Taiwan’s personal computer and electronics industry.
Currently, Apple, Samsung and HTC are the world’s leading three smart phone firms, with the iPad, social networks and cloud computing considered the hottest technology areas at the moment. The price to earnings ratios of Hewlett-Packard, Dell and other PC makers worldwide recently fell below 10, far behind Apple’s 16. Taiwan’s major computer manufacturers have all suffered significant losses. When the Apple iPad entered the market, Acer’s share price was NT$90 (US$3), it has since plunged to NT$33 (US$1.10).
Chen Chin-wen, advisor of the Asia Pacific Industry Analysis Association in Taiwan said in an article published in the paper that even Hewlett-Packard, the world’s No.1 personal computer manufacturer is struggling to compete with Apple. In the past, Taiwan benefitted from the horizontal division of labor, but now the island’s high-tech firms are suffering from the emergence of vertical integration. Chen pointed out that “Taiwan has changed from being an active protagonist to acting as a passive supporting player.”
Over the last 18 months, Taiwanese technology companies have failed to come up with a strategy to cope with the competition from Apple and Samsung. Although devices made in Taiwan fully support the Android system, the integration capability of Android in terms of hardware and software has not yet been able to compete with the iPad.
While Taiwan has become a giant in the world of personal computers, creating huge employment opportunities in China, their operational headquarters in Taiwan has not seen much momentum in profitable growth.
Chen noted that Taiwan’s computer manufacturers have survived many crises over the last 30 years, and thus he remains confident that the industry will again pull through. The reasons for Chen’s optimism rest on a number of factors. Firstly, Taiwanese companies are set to introduce new models of the Ultrabook laptop computer next year. As such, they are unlikely to suffer from the anticipated negative growth in the notebook market. Secondly, the iPad is still not able to compete with notebook computers commercially. The new operating system, Windows8, will help to create a new profit base for PCs and Notebook computers in 2012. Thirdly, the rise of cloud computing will bring huge business opportunities for Taiwan’s servers, network attached storage (NAS) and fiber-optic communications. Cloud computing of the internet data center (IDC) is predicted to be the most exciting sector of the personal computer industry next year.
Chen stressed, that starting next year, Apple may hit a bottleneck in its innovation breakthroughs, as the once bright and shiny Apple products are no longer so attractive. The open source side of personal computing is set to launch a massive counter-offensive against Apple’s dominance in the market offering an opportunity for PC makers to fight back is 2013.