Boston, MA -- (ReleaseWire) -- 04/10/2014 -- We maintain a positive outlook for Taiwan's consumer electronics market, however growth rates will underperform emerging markets in the APAC region due to relatively high penetration in key device categories such as smartphones and tablets. We forecast growth of 3.4% in 2014, with market value forecast to reach US$7.7bn. Despite the maturity of the market we identify several growth areas vendors can tap including large-screen, ultra-HD and OLED TV sets, phablets and 4G smartphones. A key factor in this outlook is the short replacement rate for smartphones and tablets, a trend we expect to continue in 2014 with consumers not expecting the longevity delivered by PCs and TVs. There is however downside risk to this outlook from a China-led slowdown which could affect the Taiwan dollar and constrain domestic discretionary spending.
Headline Expenditure Projections
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Computer sales: US$3.9bn in 2013 to US$4.0bn in 2014, +2.6% in US dollar terms. Demand for tablets will drive unit growth, helping to offset declining demand for desktops and notebooks.
AV sales: US$1.7bn in 2013 to US$1.7bn in 2014, -1% in US dollar terms. Cannibalisation of digital camera sales by multifunctional smartphones and price erosion in the TV market has limited growth.
Handset sales: US$1.9bn in 2013 to US$2bn in 2014, +6.9% in US dollar terms. Handset sales will be the most dynamic segment of the market as smartphones continue to account for an increasing share of total sales, pushing up average handset selling prices.
Key Trends & Developments
- The smartphone market in Taiwan has been the outperforming segment of the consumer electronics market in recent years - and BMI expects another year of strong growth in 2014. The roll out of 4G LTE services will be a push factor for upgrades, which should sustain growth even though the penetration rate is already relatively high. However, we expect the market for smartphones will enter a plateau from late 2014 as saturation means vendors will be forced to compete aggressively on price for the remainders in the pool of first-time buyers. Meanwhile, in the larger pool of upgrade sales we believe market leaders such as Samsung Electronics and HTC will face intense competition from expanding Chinese vendors such as Huawei and Xiaomi.
- The computer market is undergoing a major transition as consumer switch purchases from notebooks and netbooks to tablets. Demand for tablets ensures the unit growth trajectory remains on track, however with consumer increasingly opting for lower-cost Android based tablets, BMI expects increases in market value will fail to keep pace. Looking over the medium term, we expect hybrid/convertible devices to be a growth area, and is the next logical evolution in form factors by combining the productivity of notebooks with the mobility and ease of content consumption of tablets.
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