Why Sharp powered by Foxconn will struggle in notebook market

Toshiba notebook market share
Sharp – powered by Foxconn Group — is re-entering the personal computer business with the acquisition of Toshiba’s notebook division.

An analyst report from TrendForce explains what Foxxconn Group is likely to struggle in the notebook market following the deal between Sharp and Toshiba.

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.

Toshiba’s notebook shipments reached 17.5 million units in 2011, with a market share of 8.8 percent. Toshiba lost the price competition to rivals including HP, Dell, Lenovo, Apple, among others.

Its shipments fell to less than 1 million units in 2017, and the market share dropped to 0.6 percent. Toshiba, a Japanese brand, still occupies a place in commercial and European markets despite of its decreasing shipments.

Foxconn  has previously listed its subsidiary, Foxconn Industrial Internet (FII), highlighting the group’s ambition in Internet-focused businesses. The integration with 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.

Foxconn Group’s OEM orders for notebook recorded 4.69 million units, which accounted for 2.8 percent of the notebook OEM orders. In the past, Foxconn Group’s notebook OEM orders came from Apple. The deal between Sharp and Toshiba will be a shortcut for Foxconn Group to expand its notebook OEM business.

Foxconn currently has flexible production capacity of panels with Sharp’s fab in Guishan and Innolux’s fab in Tainan, etc. 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 percent of the costs of entire notebooks.

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. There are many challenges in terms of costs if Foxconn plans to copy the model in TV manufacturing to notebooks.

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