Notes on Intercultural Communication

White Box Computers – The Chaiwan Model

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White Box Computers on the Rise

Mobile devices can be built in a modular way. Like Lego, the different modules can be sourced from different companies and assembled into a desired device. The key component is the Application Processor (AP).

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application processor dialog

Application Processor (AP)

(retrieved 20.04.2014 at http://www.dialog-semiconductor.com/products/power-management/applications)

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Worldwide Tablet and PC Forecast 2012 - 2017

(terieved 20.04.2014 at http://www.idc.com/getdoc.jsp?containerId=prUS24129713)

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An interview with Joanne Chien, senior analyst & director, Digitimes Research

(…) a brand like Apple or Samsung controls everything in the process of bringing their products to market. Under the Chaiwan model, each sector does what it does best. For example, it starts with the key component provider, which in the case of smartphones is the application processor (AP). Companies like MediaTek or Qualcomm provide a turnkey solution and reference design to the players in the market.

Those other players include independent design houses (IDH), which provide design services and recommendations for components (such as connectors, casing, etc) that are not included in the AP turnkey solution. You also have EMS players, who do the manufacturing. And ultimately you have the customer, which could be a large brand, a small white-box brand, or any vendor that wants to bring a smartphone to market. Moreover, under this model, the order volumes don’t need to be very large, which means pretty much anyone who wants to can bring a smartphone to market in China, and it can be done quickly and cheaply.

Originally, this business model was developed by white-box players but it has been increasingly adopted by larger brands, such as Huawei, ZTE and Lenovo in China. A vendor such as Lenovo can direct development of one model through one IDH and EMS provider, while working with another pair of manufacturing partners for development of another model.

This has been a seismic shift for the market, but players are adapting. If you look at at AP provider MediaTek, the company no longer follows a strict roadmap. It simply reacts to what the market wants. In 2013, for example, MediaTek sometimes went a couple of months without releasing a new product and then would release two products in the same month. They weren’t following a roadmap, they were chasing demand.

This is also a new model for EMS providers, since they have been used to dealing with huge orders and following longer-term manufacturing plans. They now have to become more nimble and are learning how to cooperate with the IDHs and smaller brands for small orders and quick delivery.

Players adapt because this is where the growth is. China-based vendors account for approximately one-third of global smartphone shipments and the region had four of the top-10 vendors worldwide in 2013. For 2014, Digitimes Research forecasts that China will have five vendors in the top 10.

Looking at the rest of the market (non top 10 or “Other” segment) is even more interesting. This portion of the market is dominated by Greater China vendors and white-box players. The Other segment accounted for 12% of global smartphone shipments in 2012, 21% of the global market in 2013 and Digitimes Research forecasts the share will rise to 25.6% in 2014.

This means that the global smartphone industry is opening up rather than consolidating and it is directly a result of the dynamic interplay seen in the Chaiwan model. Moreover, China vendors are now exporting about 30% of their smartphones (as of 2013) and that proportion is forecast to rise. (…)

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1_r

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Read the full article online here or download pdf here.

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(retriewed 13.04.2014 at http://www.digitimes.com/news/a20140221VL203.html)

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2014_tablet_market

(retrieved 13.04.2014 at  http://www.digitimes.com/news/a20131231RS400.html?read=toc#66)

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Branded Unbranded Tablet Panels
(terieved 20.04.2014 at http://www.idc.com/getdoc.jsp?containerId=prUS24129713)

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(reviewed 23.04.2014)

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