The global laptop and PC market is gradually recovering, coupled with the rising trend of AIPC. Laptop brands, including Acer and ASUS, as well as major contract manufacturers like Foxconn and Quanta, have all released positive outlooks for 2024.

Semiconductor giants such as Intel, NVIDIA, AMD, Qualcomm, and others actively entered the AI PC chip market in the second half of 2023, positioning themselves strategically. Both laptop brands and terminal manufacturers have expressed expectations for this development.

Acer

Jason Chen, Chairman and CEO of Taiwan-based computer manufacturer Acer, stated on November 30th that they are currently tallying the sales performance of Acer during Black Friday and Cyber Monday, and the current results are satisfactory. Looking ahead to the PC industry next year, from an overall economic perspective, there are still many uncertain factors, but it appears to be better than this year.

Chen further pointed out that the impact of the pandemic has passed, inventory digestion has also concluded, and entering the traditional seasonal performance, the specific application of generative AI will bring a new wave of demand stimulation.

Regarding AI PCs, Chen emphasized that the transition to AI PCs will be a gradual process rather than a sudden occurrence. He anticipates this transformation will take place in both commercial and consumer markets in the future.

ASUS 

According to UDN’s report, ASUS, another major Taiwanese laptop manufacturer, emphasized the significance of AI PCs during its November investor conference. Co-CEO, S.Y. Hsu, highlighted that AI PCs represent a crucial turning point for the industry, promising a significant improvement in user experience and ushering in a new era for the PC industry.

While he acknowledged that consumer acceptance of AI PCs would take time to increase, he predicted that the penetration rate of AI PCs would reach single digits in 2024 and double digits in 2025, depending on the user experience and technological maturity of AI PCs next year.

Foxconn

For Taiwanese electronics contract manufacturer Foxconn, the outlook for the PC industry in the coming year is described as “very good” by Chiang Chih-Hsiung, General Manager of the B Group and Digital Health at Foxconn.

This indicates Foxconn’s positive expectations for performance in the PC-related industry. Foxconn had previously emphasized that, in addition to AI servers, it would collaborate with customers to expand its presence in the AI PC sector in 2024.

Quanta

In a public interview on November 30th, Chairman Barry Lam of Taiwanese electronics manufacturer Quanta discussed the overall outlook for the next year, emphasizing the role of generative AI in shaping future technological developments.

With the rapid growth in AI computing power demand, the market conditions for next year are quite optimistic. Lin is particularly bullish on the future prospects of three major products: AI PC, AI servers, and AI automotive electronics, with a special emphasis on the significant growth potential of AI PCs.

Quanta is optimistic about the growth momentum in this sector, especially with Microsoft set to launch the latest Windows featuring AI functions next summer. Quanta envisions continued collaboration with GPT in the future for PCs.

TrendForce’s Insight

TrendForce reports the global shipment of notebooks is expected to reach 167 million units in 2023—a YoY decrease of 10.2%. However, with inventory pressures easing, the notebook market is anticipated to return to a balanced supply and demand cycle in 2024. Overall shipment volume is forecast to reach 172 million units, marking a YoY increase of 3.2%.

As for AI PC, TrendForce believes that due to the high costs of upgrading both software and hardware, early development will be focused on high-end business users and content creators. This targeted group has a strong demand for leveraging AI processing capabilities to improve productivity efficiency and can also benefit immediately from related applications, making them the first-generation primary users.

The emergence of AI PCs is not expected to necessarily stimulate additional PC purchase demand. Instead, most upgrades to AI PC devices will occur naturally as part of the business equipment replacement cycle projected for 2024.

Nevertheless, looking to the long term, the potential development of more diverse AI tools—along with a price reduction—may still lead to a higher adoption rate of consumer AI PCs.

Read more

• Key Development Period for AI PCs in 2024; Global Notebook Market Set to Rebound to Healthy Supply-Demand Cycle with an Estimated Growth Rate of 3.2%, Says TrendForce

(Photo credit: Pixabay)

Foxconn has announced plans to invest over USD 1.5 billion in expanding its facilities in India. This substantial investment, a rarity in recent years, has sparked speculation that Foxconn is preparing for the introduction of new iPhone products in India.

Due to reports suggesting that in the second half of 2024, Apple will initiate the design, development, and trial production process for the iPhone 17 in India, if true, this would mark the first time in iPhone history that a New Product Introduction (NPI) is conducted outside of China, solidifying India as a potential global iPhone production hub.

Foxconn’s subsidiary, Foxconn Hon Hai Technology India Mega Development Private Limited, disclosed the plan to build the factory locally, with an expected investment of INR 128.209 billion (approximately USD 1.537 billion). This move is seen as a strategic effort to enhance iPhone production capacity in India.

According to TrendForce’s estimate, the proportion of iPhones produced in India is still below 10% in 2023, expected to reach 25-30% by 2025, and projected to achieve 35-40% by 2028. TrendForce believes that with the stable production base of Foxconn in India, it can indeed expand the output.

Analyst Ming-Chi Kuo from TF International Securities disclosed that Apple is placing a growing emphasis on the Indian market. The company intends to kick off the NPI process for the standard edition of the iPhone 17, slated for release in the second half of 2025, in India during the latter part of 2024.

Kuo further highlighted that this development signifies the first instance of a new iPhone model being developed outside of China. Choosing the standard version of the iPhone for development lowers the design complexity, reducing risks. This year, 75-80% of iPhones produced in India are manufactured by Foxconn.

According to a previous report by Indian media Economic Times, Foxconn’s factory in Tamil Nadu, India, has been producing the iPhone 15 Plus in the fourth quarter of this year and has already started production of the standard version of the iPhone 15.

Before the iPhone 14, only a small portion of Apple’s phones were assembled in India, with shipments lagging six to nine months behind those in mainland China. However, this year, India has officially entered the supply chain for the initial batch of new iPhones.

Foxconn’s India representative, V Lee, previously stated that the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by next year. However, no further details were provided.

In other product areas, there have been recent reports that three subsidiaries of the Foxconn Group will be among the first approved list of incentives for information technology (IT) production in India. Foxconn Group is also accelerating its layout for manufacturing and components in India.

(Photo credit: Apple)

Intel collaborates with Foxconn, Microloops, and Inventec to introduce a new cooling technology. Boasting superior performance compared to conventional liquid cooling, this initiative, alongside Gigabyte and Wiwynn, aims to enter the server immersion liquid cooling technology market, positioning themselves for potential orders.

TrendForce’s Insights:

1. Intel Teams Up with Taiwanese Manufacturers to Pave the Way for Liquid Cooling Technologies, Targeting Immersive Water-Cooled AI Server Orders

Intel, in collaboration with Foxconn, Microloops, and Inventec, introduces a brand new Liquid Cooling solution. This technology, capable of managing Thermal Design Power (TDP) exceeding 1500W, utilizes the principles of physical pressurization to facilitate rapid liquid flow for efficient heat dissipation.

With a threefold improvement in performance over conventional liquid cooling, the liquid cooling plate circulates water to dissipate heat. Future developments include non-conductive liquid solutions to mitigate leakage risks.

Simultaneously, Gigabyte’s subsidiary, GIGA Computing Technology, partners with liquid cooling experts CoolIT and Motivair to unveil cutting-edge liquid cooling solutions. The strategic focus on liquid and immersive liquid cooling aims to enhance the sustainability and energy efficiency of data centers.

Wiwynn, also keenly interested in liquid cooling technology, has secured substantial orders from Middle Eastern clients by prioritizing two-phase immersion cooling technology, with rumors suggesting the order’s value is approximately USD 4 billion.

The advantages of two-phase cooling technology include fanless operation, rapid heat dissipation, noiseless and vibration-free performance, and higher cooling energy efficiency. Moreover, it is less susceptible to environmental influences, ensuring normal usage.

On the other hand, Taiwanese manufacturers, AURAS Technology and AVC (Asia Vital Components), are actively developing and mass-producing open-loop liquid cooling and immersion liquid cooling technologies.

Due to the novelty of immersion cooling technology, the current market demand visibility is relatively low. However, major Taiwanese contract manufacturers are increasingly focusing on the technical development and introduction of immersion cooling solutions. This is primarily driven by the growing demand for high-end AI servers, which require efficient computation and often generate high power consumption.

At present, only immersion liquid cooling can provide a cooling solution surpassing 1500W, meeting the requirements of large-scale data centers. Consequently, numerous Taiwanese manufacturers are actively engaging in the development of this technology to seize the opportunities presented by the initial wave of immersion liquid cooling products.

2. Short-Term Dominance of 3D VC Air Cooling and Open Liquid Cooling Technologies in Heat Dissipation Solutions

Due to the need for adjustments in facility structure, including the layout of cooling spaces, immersion liquid cooling comes with higher construction costs. Cases of immersion liquid cooling in large-scale data centers are also relatively rare.

In consideration of cost, many enterprise users still opt for 3D VC (Vapor Chamber) air cooling technology to establish their data centers, aiming to save on the significant costs associated with facility modifications.

3D VC air cooling and open liquid cooling technologies are the current primary options for heat dissipation solutions. The retrofitting cost for 3D VC is twice that of traditional cooling modes, while the cost for liquid cooling solutions can be up to 10 times higher than traditional modes.

Therefore, enterprise users need to tailor their server deployments based on specific requirements, taking into account the Thermal Design Power (TDP) to choose the corresponding heat dissipation solution.

For instance, AI servers with power consumption ranging from 1000 to 1500W can utilize open liquid cooling solutions, while those below 1000W may adopt the 3D VC cooling approach.

With the target of achieving net-zero emissions by 2050, both China and Europe impose restrictions on the Power Usage Effectiveness (PUE) of data centers, limiting it to no higher than 1.4.

In anticipation of this, server OEMs and cooling solution providers are expected to increase the development and offerings of liquid and immersive liquid cooling products. This trend aims to provide data centers with customized solutions and services, aligning with the evolving energy efficiency requirements.

On October 31, 2023, Apple held a product launch event for its M3 chips. Reports suggest that Foxconn has secured a portion of existing MacBook Pro and iMac orders from Quanta. This marks the first time Foxconn has taken orders for higher-end MacBook Pro models.

The order distribution between Foxconn and Quanta has shifted, resulting in a more balanced competition. Quanta may need to expedite the introduction of new factory automation projects and relocate production facilities to reduce labor costs and regain its share of MacBook Pro and iMac orders.

TrendForce’s Insights:

1. Foxconn’s Notebook Factories Excel in Materials, Automation, and Factory Management

Up until 2022, Apple’s computer assembly supply chain was primarily served by two Taiwanese companies, Foxconn and Quanta. In the second half of 2022, Chinese company Wingtech Technology entered the Apple computer assembly supply chain for the first time, initially securing a small portion of orders for MacBook Air products. While they currently hold only a fraction of the orders, they will undoubtedly pose a significant challenge to Foxconn and Quanta in the future.

Quanta, favored by Apple for its tech-oriented approach, faces tough competition from Foxconn, known for its high degree of factory management and production line automation.

The reason for Quanta losing a portion of its high-end notebook orders might be linked to the minimal design differences between the new models featuring the M3 chip and their predecessors.

Moreover, their assembly, testing, and packaging processes remain alike. Hence, Apple adjusts order proportions in its supply chain according to the production yield and quotes from assembly factories as part of risk management. Material costs, labor expenses, and production-related costs are the main elements in the product cost structure. At this stage, labor costs in Shanghai are higher than in Chengdu.

Additionally, Foxconn is one of Apple’s computer case suppliers, giving it priority in material usage. Given Foxconn’s extensive projects for production line automation, their acquisition of Apple’s high-end M3 chip orders for the MacBook Pro has significantly bolstered their standing.

In the future, as long as Apple’s computer designs undergo minimal changes, Foxconn can enhance its output by accelerating the replication of similar production lines. This strategy aims to satisfy customer demands across production volume, costs, quality, and delivery time. Consequently, Foxconn’s aim to capture a share of Quanta’s orders is just a matter of time.

2. Quanta Needs to Accelerate Factory Automation and Establish Vietnam Facilities

Quanta’s factory in Shanghai, producing computer goods, operates within a labor-intensive industry. With the continual rise in local labor costs, recruiting in Shanghai, primarily an area with a service and finance-oriented workforce, becomes increasingly challenging. This scenario significantly impacts the overall workforce deployment in the production line.

Despite having facilities in Chongqing, the company’s strong presence of Apple repair centers in Shanghai anchors its focus there. Moreover, the ongoing establishment of Quanta’s Vietnamese facilities abroad will take time to address production capacity. Hence, Quanta might need to expedite factory automation in Shanghai to reduce labor usage, effectively cutting costs, and potentially regaining Apple orders.

Apple’s computer assembly has long been centered around China, but due to geopolitical influences, Quanta has ultimately shifted to establish production facilities in Vietnam

Vietnam has emerged as an electronic industry hub in the “China+1” strategy. Quanta should leverage local resources to transfer small-scale production lines to Vietnam for manufacturing. By obtaining brand verification for these products beforehand, they aim to shorten the preparation time before mass production, with the goal of reducing costs, improving yields, and regaining customer confidence.

Read more

• [News] Apple’s Exclusive AI Order Boosts Revenue via Foxconn’s FII Vietnam Plant
• Why Laptops Are Speeding Up the Rise of Vietnam?

(Photo credit: Pixabay)

According to TechNews’ report, Foxconn announced its October revenue on November 5th, reaching 741.2 billion NTD (New Taiwan Dollars). This represents a 12.20% month-on-month increase and a 4.56% year-on-year decrease, marking one of the highest revenues for the same period in recent years. For the accumulated revenue in the first ten months of this year, Foxconn achieved 5.494 trillion NTD, marking a 7.21% year-on-year decrease but still staying relatively high compared to past years.

Examining the performance by product categories on a monthly basis, the “Computing Products” category exhibited robust growth, benefiting from pre-holiday stockpiling due to the Chinese “Double 11” Shopping Festival and the Thanksgiving holiday in North America. The “Cloud and Network Products” category also saw strong growth as a result of increased demand from American server brand clients.

The “Smart Consumer Electronics” category experienced growth due to demand for new products, as well as early holiday stockpiling in preparation for Chinese Double 11 and the North American Thanksgiving. In contrast, the “Components and Other Products” category remained relatively stable month-over-month, as increased shipments of components for consumer intelligent products were offset by reduced demand in non-core business segments.

Looking at annual performance by product categories, the “Components and Other Products” category experienced substantial growth, attributed to an increased share of supply in consumer intelligent products and growth in shipments of automotive electronic components. The “Consumer Intelligent Products” category remained relatively steady.

In contrast, the “Cloud and Network Products” category displayed a more conservative momentum in client pull-ins, and the “Computer Terminal Products” category showed signs of weakening due to a slowdown in PC market demand.

Foxconn’s outlook for the fourth quarter remains positive, anticipating that the latter half of the year will benefit from the traditional peak season in the information technology industry. Therefore, operations are expected to gradually pick up each quarter, and the company maintains its view that the fourth quarter will exhibit significant growth compared to the third quarter.

Recent report from Anue has also suggested that Foxconn secured more than half of the orders for the MacBook series for the first time this year, along with strong sales of the iPhone 15 Pro, which are likely to drive revenue growth in the fourth quarter.

(Photo credit: Foxconn)