Recovery in IT spending brings surge of hardware orders

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October 23, 2003 (IDG News Service) -- Orders for IT hardware from Taiwanese manufacturers have surged to record levels and the average selling price (ASP) has increased for many products in recent months thanks to an improving economic environment and a gradual recovery in corporate IT spending, according to Market Intelligence Center (MIC), a government-backed market research firm in Taipei.
Taiwanese hardware makers are the manufacturing backbone of the IT industry and an important barometer of demand from major vendors, including Hewlett-Packard Co. and Dell Inc.
Overall, hardware shipments from Taiwanese manufacturers are hitting levels not seen in years as orders climb for a range of IT products, including digital still cameras, flat-panel displays, notebook PCs, desktop PCs, servers, motherboards, optical disc drives and mobile phones, according to MIC. The increase in shipments is due to an improved economic environment and a gradual recovery in corporate IT spending, the research firm said.
Desktop PC shipments from manufacturers in Greater China rose by 18.9% on an annual basis during the third quarter to 7.5 million units, a level that hasn't been seen since 2001, according to MIC. In dollar terms, the value of third-quarter shipments rose 26.2% from $1.7 billion to $2.1 billion, it said, noting that demand continues to grow "unabated."
Shipments of notebook PCs climbed higher during the third quarter, growing 37.6% to 6.4 million units, a record high, MIC said. The value of those shipments also soared, up 22.4% to an historic high of $4.2 billion, it said.
Server shipments also reached a record high during the third quarter, with unit shipments reaching 445,000 units, an increase of 21.4% compared with the same period last year, MIC said. While the ASP of servers dropped during the third quarter, the value of those shipments reached $381 million, an annual increase of 18.3%, it said.
Taiwanese hardware makers posted strong increases in unit shipments for digital still cameras, up 118.1% to 4.8 million units; motherboards were up 24.3% to 33.8 million units; thin-film transistor-LCD, or TFT-LCD, panels were up 68% to 9.5 million units; optical disc drives were up 35.3% to 26 million units; and mobile phones were up 24% to almost 10 million units, MIC said.
Strong demand from vendors has led to shortages of some components, resulting in higher costs or a slowdown in the decline of prices, MIC said.
A shortage of TFT-LCD panels and batteries continued during the third quarter and resulted in higher component costs for notebook manufacturers, MIC said. This has raised notebook PC costs and is likely to slow a drop in prices, MIC said. Nevertheless, notebooks still showed a 0.9% drop in ASP during the third quarter, it said.
A range of products, however, saw an increase in ASP during the third quarter. The ASP for desktop PCs, for instance, was up 4.9%, while motherboards rose 3.8% and TFT-LCD panels 6%, MIC said. The ASP for mobile phones also rose during the third quarter to the highest level in nine months, spurred by a greater percentage of phones incorporating color displays and digital cameras, it said.

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