© wrangler dreamstime.com Analysis | June 19, 2018
Acquisition of Toshiba PC business helps diversify business for Foxconn Group
Sharp acquiring Toshiba’s personal computer business, bringing new dynamics to the notebook market. Sharp has shuttered its own PC business previously, but this deal may be associated with the strategic development of Foxconn Technology Group, says WitsView, a division of TrendForce.
The expansion to notebook markets is in line with Foxconn Group’s internet and industrial-focused vision, and will allow Foxconn Group to cut into the ecosystem of notebook OEM, the market analyst states. Regarding Toshiba’s performance in the notebook market, its shipments once reached 17.5 million units in 2011, with a market share of 8.8%. Unfortunately, with the saturation of notebook market, Toshiba lost the price competition to rivals. Its shipments fell to less than 1 million units in 2017, and the market share dropped to 0.6%. However, as an established Japanese brand, Toshiba still occupies a place in commercial and European markets despite of its decreasing shipments. Its reputation of high-quality may be part of Sharp's motive for this deal. In fact, Sharp used to be inactive in the notebook market, so the acquisition this time is likely to be related to Foxconn Group’s strategic deployment, says WitsView. Foxconn Group has previously listed its subsidiary, Foxconn Industrial Internet Co. Ltd (FII), highlighting the group’s ambition in Internet-focused businesses. The integration with traditional notebook industry may not be very innovative, but as 5G is about to flip the internet world, the deal may trigger potential changes in the market. In terms of business expansion, Foxconn Group has not been very outstanding in the notebook OEM industry. In 2017, its OEM orders for notebook recorded about 4.69 million units, which accounted for only 2.8% of the notebook OEM orders worldwide. In the past, Foxconn Group’s notebook OEM orders came only from Apple, so it remained difficult for the amount of orders to grow. After integrating the brands of Sharp and Toshiba in the future, it would be a shortcut for Foxconn Group to expand its notebook OEM business. On the other hand, Sharp’s TV business staged outstanding shipment performance in 2017 with the support from Foxconn Group, so it is worth noticing whether the situation will be the same for Toshiba after being acquired. According to WitsView, Foxconn Group currently has flexible production capacity of panels with Sharp’s fab in Guishan and Innolux’s fab in Tainan, etc. However, it is not easy to rebuild the brand in notebook market by only leveraging panel resources, because a notebook panels account for only 10~15% of the costs of entire notebooks, which is much lower than TV panels that account for 60~70% of the costs of the entire TV. In addition, Foxconn Group has relatively limited resources in the supply of other key components of notebook, including CPUs, memory, solid-state drive, and traditional hard disks. Therefore, there are still many challenges in terms of costs if Foxconn Group plans to copy the model in TV manufacturing to notebooks.
More can be found at Trendforce.
More can be found at Trendforce.
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