TrendForce‭: ‬Ultrabooks to Stimulate‭ ‬Key Component Market, Notebook LED Demand to Be Determined‭, ‬Competition Heightened

Ultrabooks are set to take the‭ ‬market by storm‭, ‬gradually taking a piece of the‭ ‬traditional notebook market and providing‭ ‬new momentum for the entire IT industry‭. ‬According to‭ ‬market research firm TrendForce‭, ‬chip giant Intel is leading the ultrabook revolution in 2011‭, ‬with the MacBook Air‭ ‬dominated‭, ‬ultra thin and light notebook market as their goal‭. ‬The birth of ultrabooks is expected to benefit many different industries‭, ‬and will hopefully sweep away the‭ ‬clouds of tablet PC popularity and global economic factors currently looming over the PC industry‭.‬

Intel‭, ‬along with‭ ‬the rest of the PC industry chain‭, ‬aims to produce‭ ‬an ultrabook‭ ‬as thin and light‭ ‬as the MacBook Air‭, ‬with‭ ‬longer battery life and better computing efficiency than standard notebooks‭. ‬PC makers will be introducing‭ ‬different models of ultrabooks‭ ‬between 4Q11‭ ‬and 2Q12‭. ‬TrendForce CEO Kevin Lin indicates‭, "‬We believe that‭ ‬ultrabook market share‭ ‬will jump‭ ‬from‭ ‬under‭ ‬2%‭ ‬in 2011‭ ‬to over 10%‭ ‬in 2012‭, ‬stimulating‭ ‬renewed growth of the PC industry‭."‬


Since the ultrabook strives for thin and light form factor‭, ‬efficiency‭, ‬and long battery life‭, ‬key‭ ‬component parts need to be‭ ‬revamped‭ ‬in order to fulfill ultrabook needs‭. ‬This will in turn‭ ‬open up other areas for the application of new technology‭, ‬and support the improvement of specifications‭. ‬However‭, ‬as key component price will‭ ‬be‭ ‬relatively high‭ ‬in the early stages and Apple's leading‭ ‬MacBook Air‭ ‬has been on the market for some time now‭, ‬Kevin Lin further indicates‭, ‬“PC manufacturers will introduce different levels of ultrabooks at different price points‭, ‬in hopes that having models with varying specifications will help them maneuver the market‭, ‬satisfy consumer needs‭, ‬and compete in Apple's domain‭."‬

Hybrid Storage Devices‭ ‬Emerge‭, ‬SSD Demand to Increase Significantly in 2012

Apple's‭ ‬MacBook Air boasts‭ ‬a‭ ‬solid-state drive‭ (‬SSD‭), ‬emphasizing its superior computing efficiency when compared to traditional hard drives‭. ‬This design has‭ ‬impressed‭ ‬consumers and increased PC makers‭' ‬willingness to use SSD in mobile computing devices‭. ‬In order to achieve power efficiency and performance‭, ‬ultrabooks must follow suit‭. ‬DRAMeXchange‭ ‬assistant‭ ‬vice‭ ‬president Sean Yang indicates‭, "‬As‭ ‬SSD cost remains much higher than traditional hard drive cost‭, ‬many‭ ‬of the‭ ‬ultrabooks‭ ‬currently promoted by PC vendors are equipped with‭ ‬hybrid hard drives‭. ‬For instance‭, ‬over 320GB of traditional hard drive‭ ‬paired‭ ‬with a small amount of SSD will increase efficiency while still keeping cost under control‭. ‬Whether equipped with large amounts of SSD or hybrid storage devices‭, ‬ultrabooks will effectively stimulate NAND flash demand growth‭, ‬providing significant benefit to the entire NAND flash industry in 2012‭."‬

Low Power Consumption RAM Provides Longer‭ ‬Battery Life‭ ‬Performance‭, ‬Key to Success Lies in Process Technology

Striving for both energy efficiency and thin and light form factor‭, ‬ultrabooks will‭ ‬change the direction of‭ ‬the memory market‭. ‬In terms of memory capacity‭, ‬as memory makers transition from 30nm to 20nm‭-‬node‭ ‬process technology‭, ‬due to cost structure considerations‭, ‬single module capacity will‭ ‬gradually shift from 2Gb to 4Gb‭. ‬Furthermore‭, ‬to achieve the ultrabook's thin and light goal‭, ‬the number of manufacturers choosing‭ ‬to weld‭ ‬RAM directly to the motherboard will increase significantly‭. ‬Considering‭ ‬the limitations‭ ‬of finite PCB space‭, ‬the upgrade to‭ ‬4Gb modules will help maintain 4GB memory specifications‭.‬

While‭ ‬1.5V is the current standard of mainstream DDR3‭, ‬in order to fulfill the ultrabook's‭ ‬longer battery life needs‭, ‬the number of‭ ‬major manufacturers‭ ‬producing DDR3L‭ (‬1.35V‭) ‬will increase‭ ‬markedly in the future‭. ‬In 2012‭ ‬DDR3L is‭ ‬expected to be‭ ‬the‭ ‬loaded memory‭ ‬standard‭ ‬for ultrabooks‭, ‬and will save approximately 10-15%‭ ‬power compared to current specifications‭. ‬DRAMeXchange analyst Avril Wu indicates‭, "‬In the long‭ ‬run‭, ‬if LPDDR3‭ ‬realizes economies of scale‭ ‬in 2013‭, ‬resulting in a cost difference of less than 100%‭ ‬compared to DDR3L‭, ‬the ultrabook target of having over 10‭ ‬hours of battery life is not out of reach‭."‬

Battery‭ ‬Price‭ ‬Increases with Rising‭ ‬Cell Cost‭ ‬Proportion‭,
Polarization‭ ‬by Product Type‭ ‬also‭ ‬Inevitable‭ ‬

Not only do ultrabooks use‭ ‬higher density batteries than‭ ‬tablet PCs‭, ‬but ultrabook‭ ‬system‭ ‬power consumption is 40-60W‭, ‬a‭ ‬100-200%‭ ‬increase compared to tablet PCs‭' ‬20-25W figures‭. ‬Thus‭, ‬the‭ ‬proportion of total‭ ‬battery module‭ ‬cost represented by battery core‭ ‬has‭ ‬increased‭ ‬as well‭, ‬from‭ ‬60%‭ ‬to over 70%‭. ‬Compared to tablet PCs‭, ‬average battery module unit price has also increased by 60-70%‭, ‬presenting Taiwanese battery manufacturers with‭ ‬a chance‭ ‬to see increases in product unit price‭.‬

Ultrabook faces a battery challenge‭: ‬efficient management of battery cell supply and‭ ‬cost‭. ‬Currently the supply chain mainly uses ATL‭, ‬but as application of large-size battery core is limited‭, ‬whether or not the use of‭ ‬polymer‭ ‬batteries will spread depends on how the market responds to the first wave of ultrabooks‭. ‬It is a seller's market‭, ‬and battery core supply remains tight‭.‬

As for cost control‭, ‬there are three options for ultrabook‭ ‬battery core type‭: ‬polymer‭, ‬thin‭ ‬prismatic‭, ‬and thin cylindrical‭. ‬With the diversification of battery‭ ‬core‭ ‬application‭, ‬system development has led to a polarization of price‭. ‬EnergyTrend analyst Duff Lu states‭, "‬As‭ ‬pressure to lower price increases‭, ‬it is expected that 30%‭ ‬of the ultrabook battery‭ ‬core‭ ‬market will‭ ‬be comprised of‭ ‬more economical battery types‭. ‬More importantly‭, ‬as tablet penetration rate gradually approaches saturation‭, ‬market focus will shift from low-priced tablet PCs to more costly ultrabooks‭. ‬Hopefully‭, ‬this will provide a new‭ ‬source of revenue for Taiwanese battery manufacturers‭."‬

Source: EnergyTrend

Notebook LED Demand to Be Determined‭, ‬Competition Heightened

The thin and light requirement is also expected to raise demand for ultra slim LED backlight modules and will hopefully invigorate the stagnant LED backlight market‭. ‬However‭, ‬as ultrabook‭ ‬production‭ ‬volume will be limited in the beginning‭, ‬and traditional notebook shipments have suffered due to tablet PC popularity‭, ‬ultrabooks will be unable to increase LED backlight demand in the short term‭. ‬Nevertheless‭, ‬as ultrabooks require thin panels and power efficiency‭, ‬demand for‭ ‬backlight modules‭ ‬with‭ ‬0.8t‭ ‬or‭ ‬0.8LV side view LED‭ ‬is expected to increase‭. ‬Eventually‭, ‬they will replace‭ ‬the‭ ‬3014‭ ‬package type‭ ‬used by traditional notebooks‭, ‬and‭ ‬indirectly‭ ‬raise‭ ‬LED product ASPs‭.‬

Ultrabooks have raised the bar‭ ‬in‭ ‬LED backlight competition with‭ ‬the use of‭ ‬more 0.8t and 0.8LV low voltage LED products‭. ‬In the future‭, ‬LED product development will head towards even thinner form factor‭. ‬Thus‭, ‬Japanese LED manufacturers‭ ‬in the early and mid-market stage are getting a head start on the LED backlight market‭. ‬Nichia and TG have both increased shipments of ultrabook LED backlight products‭.‬

LEDinside analyst Renee Liao predicts‭, "‬In the short term‭, ‬the effect of‭ ‬ultrabooks on the LED market is not likely to be significant‭, ‬but will increase as ultrabook penetration rate increases‭. ‬By 2015‭, ‬LEDs used in ultrabooks will account for 30%‭ ‬of total notebook LED use‭." ‬As LED specifications continue to improve‭, ‬the‭ ‬average‭ ‬number of LEDs‭ ‬used‭ ‬in‭ ‬each‭ ‬unit will decrease‭. ‬As for whether or not‭ ‬overall‭ ‬notebook LED demand will‭ ‬help‭ ‬the LED backlight‭ ‬market‭, ‬only time will tell‭.‬

Open Cell Panel and Ultra‭ ‬Slim‭ ‬Panel Modules Facilitate Ultra‭ ‬Slim‭ ‬Goals

Striving for thin and light form factor for panels as well‭, ‬WitsView analyst Boyce‭ ‬Fan states‭, "‬The hinge‭ ‬up‭ ‬assembly mode‭ ‬will‭ ‬bring about a transition‭ ‬from‭ ‬panel modules‭ ‬to open cell panels‭ (‬panels that have not‭ ‬been through‭ ‬the backlight module assembly stage‭). ‬Using‭ ‬open cell panels to integrate backlight modules with‭ ‬notebook covers‭ (‬component A‭), ‬this assembly method reduces the thickness of the‭ ‬back‭ ‬cover‭ ‬and‭ ‬module frame‭, ‬simultaneously achieving thin form factor and‭ ‬cutting costs‭." ‬As this method‭ ‬requires close integration of optical design‭ ‬and assembly‭, ‬backlight‭ ‬module‭ ‬manufacturers have the opportunity to establish‭ ‬their key role in the supply chain with‭ ‬the hinge‭ ‬up assembly mode‭.‬


In addition to the hinge‭ ‬up‭ ‬method‭, ‬panel makers are also planning to produce ultra‭ ‬slim‭ ‬panel modules‭, ‬utilizing‭ ‬chemical etching‭ ‬to reduce glass thickness from 0.5mm to 0.3mm‭, ‬subsequently lowering module thickness from the 3.6mm of traditional modules to less than 3mm‭. ‬However‭, ‬as‭ ‬the cost of‭ ‬chemical‭ ‬etching‭ ‬is still relatively high‭, ‬currently ultra‭ ‬slim‭ ‬panel module cost is approximately 20-30%‭ ‬higher than traditional modules‭.‬

Ultrabook Brings Opportunity for Renewed PC Market Growth

As for the big picture‭, ‬the cannibalization of traditional notebooks by ultrabooks is inevitable‭, ‬but the new platform will also stimulate demand for and advancement of‭ ‬industry technology‭. ‬According to comprehensive analysis by TrendForce's research divisions‭, ‬ultrabooks will provide positive growth for‭ ‬key component parts‭. ‬However‭, ‬as ultrabook component cost will be higher than their notebook equivalents in the early stages of‭ ‬production‭, ‬manufacturers will have a difficult time competing with Apple's MacBook Air in terms of specifications and‭ ‬price‭.‬

According to statistics compiled by TrendForce‭, ‬compared to the MacBook Air's US$999‭ ‬price tag‭, ‬average ultrabook retail price will initially be set at around US$800-1,100‭. ‬As traditional notebooks are currently available for‭ ‬US$300-500‭, ‬the higher-priced ultrabooks should‭ ‬help increase total revenue for the notebook‭ ‬industry‭.‬

Trendforce Research Divisions:

If you would like to know more details , please contact:

Ann Chang

+886-2-7702-6888 ext. 665
Sara Fan

Joanne Wu

+886-2-7702-6888 ext. 972
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