Tablet PC Brand Panel Sourcing and ODM

Tablet PC continues to be one of the hottest topics of 2011, and it influences various industry segments: LCD, touch, CPU, operating system, software development, content and OEM/ODM companies. By the end of 2010, there was essentially only one brand—Apple—influencing these industries. However, by mid-2011, many tablet PC brands have commercialized their products, and many more models are queuing for a launch in 2H’11. Therefore we believe this is a good time to review each tablet PC brand’s supply chain strategy, especially the suppliers of key components and the outsourcing system integrators.

The brands we cover in this article are Apple, Acer, ASUS, HTC, Lenovo, Motorola, Dell, HP, Samsung, RIM (Blackberry), LG, Amazon, Sony, Sharp, NEC and Toshiba. We analyze each brand’s sourcing strategy.

Apple keeps its operating system and CPU in-house. The only OEM/ODM is Foxconn. Foxconn has mainly been producing iPads in Shenzhen, China. However, it plans to move more iPad assembly to the Chengdu factory. It is believed that Apple approved a production shift from Shenzhen to Chengdu earlier this year, with 60% of iPad production ultimately to take place in Chengdu and 40% in Shenzhen. Foxconn’s plan is to build about 50 iPad assembly lines in Chengdu, each with a manufacturing capacity of one million units per year.

Apple plans to ship more than 40 million iPads this year, but this might be a very aggressive target as the Q1’11 iPad shipment is merely 5M units according to the Quarterly Mobile PC Shipment and Forecast Report.

Table 1                         Apple Tablet PC Value Chain

Acer 
Acer’s Iconia tablet PC is recognized by many as very promising, especially its solid hardware features and connectivity. In fact, Acer has two Iconia models—one with Android OS and one with Windows OS. The two models are made by different system integrators but with the same TFT LCD,which is supplied by AUO with MVA (Multiple Vertical Alignment) technology. Acer has a very aggressive target for 2011 atabout 6M units.

Acer is also planning to upgrade its 10.1” screen from 1280 × 800 to 1920 × 1200.

Table 2                         Acer Tablet PC Value Chain

ASUS 
ASUS is currently selling two tablet PCs, the 7” and the 10.1” EeePad. Both use IPS panels from LG Display and HannStar. The CPU is NVidia’s Tegra 2, and the system integrator is Pegatron in Taiwan. ASUS is also recognized as a potential market share grabber in the tablet PC market. ASUS has decided to focus on the 10.1” EeePad TFT101; therefore the 7” EeePad will be dropped soon.

The ASUS EeePad TF101 is quite astonishing with its convertible form factor that combines the keyboard and the tablet, as shown in the figure below. ASUS has a shipment target—again quite aggressive—of 2 million units for its whole line-up. Currently ASUS is working with its OEM Pegatron on the Eee-Pad EP102 Slider, which ASUS has shown in prototype (also shown in the figure below). The slider has a unique design that combines keyboard and tablet in one form factor: the tablet screen slides up to reveal the keyboard. ASUS is clearly implementing many innovative product design ideas in this segment. ASUS is planning to upgrade its 10.1” tablet PC screen resolution from 1280 × 800 to 2560 × 1600, which is almost 300 ppi. The very high pixel density will be a good feature, but it will also present challenges for panel suppliers because the higher the resolution, the lower the brightness performance. Such high pixel density will also require the eDP (DisplayPort) interface because of the multi-channels for data streams.

Table 3                         ASUS Tablet PC Value Chain

Figure 1                      ASUS EeePad TF101 Transformer (left) and FP102 Slider Prototype (right)

Source: ASUS

In the near future, HTC plans to upgrade its Flyer panel from 1024 × 600 to 1280 × 800. Although HTC did not indicate a 2011 shipment target, many estimate the target at between 1M and 2M.

Table 4                         HTC Tablet PC Value Chain

As shown in the following figure, the pen input is a unique feature of the HTC Flyer.

Figure 2                      HTC Flyer Tablet PC

Source: HTC

Table 5                         Lenovo Tablet PC Value Chain

Motorola 
Motorola’s Xoom uses Sharp’s 10.1” ASV panel, and the OEM is Compal. According to the Quarterly Mobile PC Shipment and Forecast Report, Motorola shipped approximately 500K units between its launch in Q4’10 and Q1’11—and shipment volume is still growing. This is likely positive news for panel maker Sharp and ODM maker Compal. Although Motorola does not indicate a clear shipment target, supply chain information reveals that the 2011 shipment target is estimated at 2M-3M.

Table 6                         Motorola Tablet PC Value Chain

Dell 
Dell is one of the early developers in the tablet PC area with its Streak 5 and Inspiron duo. The Streak 5 uses a unique 5” panel from AUO that integrates the touch module function with the TFT LCD panel. The Inspiron Duo uses a special 10.1” 1366 × 768 panel from AUO. As shown in the following figure, the Inspiron has a special hinge with a twist function to convert the whole laptop into a tablet. Like the traditional notebook PC, the Inspiron duo is embedded with Windows OS.

Figure 3                      Dell Inspiron duo

Source: Dell

The Dell Streak 7 will be updated with a higher resolution (1280 × 800) panel supplied by Hydis and launched in Q4’11. Dell is also developing a Gallo tablet with a 10.1” 1280 × 800 MVA panel from AUO. The Gallo will be made by Pegatron with Android OS and NVidia Tegra CPU.

In the near future, Dell plans to upgrade the Gallo’s 10.1” screen to higher resolution of 1920 × 1200, which will be probably supplied by Hydis with IPS technologies. The 1920 × 1200 will have a 16:10 aspect ratio, which is different from the Inspiron duo notebook which has 16:9 aspect.

Table 7                         Dell Tablet PC Value Chain

HP 
HP launched its first tablet PC with 9.7” 1024 × 768 IPS panels from Samsung and LG Display, which are exactly the same as Apple’s iPad. HP also launched an 8.9” tablet, which is called the Slate 500, with Windows OS and Intel Atom CPU architecture. The OEM for HP’s tablet PC is mainly Inventec in Taiwan.

Table 8                         HP Tablet PC Value Chain

Samsung 
Samsung’s Galaxy Tab comes in three sizes: 7” 1024 × 600, 8.9” 1280 × 800 and 10.1” 1280 × 800. The 10.1” 1280 × 800 is 149 ppi. Samsung places the 10.1” at a higher promotional priority than the 7”. The 8.9” tab is not quite in MP yet, although the 8.9” is targeted at users who want a mid-size tablet PC. The Galaxy Tab CPU is a 1 GHz Cortex A8 from ARM, and the GPU (Graphic Processor Unit) is PowerVR SGX 540. Samsung shipped fewer than 1.5M Galaxy tabs in 2010, according to the Quarterly Mobile PC Shipment and Forecast Report; however, Samsung is aggressively targeting 6-8M for 2011.

Samsung buys the Galaxy Tab panel from multiple suppliers including BOE, Hydis, Samsung LCD and SMD (Samsung Mobile Display). However, Samsung planned the 7” tablet too aggressively in 2010 and caused some panel inventory issues.

In the long run, many believe that Samsung will apply 7” AMOLED to the Galaxy Tab 7 for differentiation. The 7” AMOLED will be supplied by SMD. The Galaxy Tab 10.1 may upgrade the LCD to 2560 × 1600, which will be supplied by Samsung LCD. SMD and its Gen 5.5 AMOLED line will be the world’s first to realize mass production of large-area AMOLED. Samsung’s Galaxy Tab will be the world’s first to adapt AMOLED panels.

SMD started ramping up the Gen 5.5 AMOLED line, which is called the A2 fab, from May 2011. However, it looks like AMOLED demand is not surging as AMOLED makers expected. AMOLED demand from Samsung Galaxy mobile phone is strong, but brands such as Nokia are facing slow demand.It is known that Nokia recently sent some AMOLED order cuts to panel makers. Other big smart phone brands such as Apple, HTC, Motorola and LGE, however, have more interest in high resolution LCD than in AMOLED. This will probably limit the potential for AMOLED growth to continue in the mobile phone market. Therefore AMOLED makers may want to focus on tablet PC faster than they originally thought.

SMD is developing sizes ranging from 4” to 7” for tablet PC. The Galaxy Tab will be the early adaptor for these new AMOLED panels. In the meantime, rumors indicate that SMD is trying to pull in laser evaporation for their latest AMOLED line.

AMOLED has suffered from low resolution compared to the retina display. They have adopted PenTile displays to make WVGA resolution in 4” because of the limitations of conventional FMM (Fine Metal Mask) evaporation.However, it is now believed that laser evaporation can make high resolution with true R,G,B pixel structures by laser evaporation.

The tablet PC market is also moving to ultra high resolution such as WQXGA (2560 × 1600). Therefore the move to high-resolution AMOLED will allow them to enter the tablet PC market.

Table 9                         Samsung Tablet PC Value Chain

RIM (Blackberry) 
RIM (Blackberry)’s PlayBook tablet PC is getting lots of attention. Quanta is the ODM for the PlayBook, and the 7” IPS panel is supplied by Hitachi and LG Display.RIM did not announce its 2011 shipment target, but speculation has it at 5M.

Table 10                     RIM Tablet PC Value Chain

LG 
LG Electronics has two tablet PCs on the shelf currently: an 8.9” and a 10.1”. LG Display is the sole panel supplier for both models.

Table 11                     LG Tablet PC Value Chain

Amazon 
Amazon is planning to launch its own brand tablet PC, following its success in the e-reader market. There is much talkabout what kind of panel Amazon plans to use. The rumors include that the tablet PC is actually a Kindle using a color electrophoretic 9.7” display or that the tablet PC will use the FFS LCD from Hydis. The rumors also indicate that Hydis, Chimei Innolux and HannStar are planning to produce the 7” IPS (or FFS) panel for Amazon. Rumor further says that Amazon is aggressively planning to sell 10M of its tablet PC. Anyway, as far we’ve learned, the 7” tablet PC is under development, but 8.9” and 10.1” tablets are still under consideration.

Table 12                     Amazon Tablet PC Value Chain

Sony, Sharp, Toshiba and NEC 
Tablet PC shows the value chain for these Japanese PC brands. All of them use the Android OS. Sony chose unusual sizes—9.4” and 5.5”, respectively—for its S1 and S2 tablet PCs. The S2 is equipped with two 5.5” panels, as the figure below shows. Sharp’s Galapagos tablet PC also has unusual screen sizes—5.5” and 10.8”.

Toshiba announced the Folio 100 with a 10.1” 1024 × 600 screen, but it seems that this tablet is not Toshiba’s main product for the tablet PC market. Toshiba plans to launch the Thrive in July. The Thrive is priced at $449, which is considered quite competitive. The 10.1” 1280 × 800 Thrive IPS panel will be supplied by Chimei Innolux and HannStar. The system integrator is Compal.

Table 13                     Sony Tablet PC Value Chain

Figure 4                      Sony S1 and S2 Tablet PCs

Source: Sony