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Undeniable Mobile Opportunities Shift Semi's Core Market


The strength of the mobile computing market is certainly undeniable. As such, many see it as the new face of the traditional PC core market for semiconductors.  The debut of the iPad and tablet PCs, presented challenges to traditional PCs with some calling tablets the demise of PCs. Industry leaders, however, are finding resolution in positioning tablets as a next generation PC in many ways, and rather than seeing the PC's demise, we should see this as a new path forward.

Case in point: Lenovo. Long the PC cornerstone giant, and the second-largest global PC manufacturer, Lenovo announced this week that it is expanding both regionally and vertically.  "At the end of 2011, Lenovo became the world’s second-largest PC maker after being the world’s fastest growing PC maker for nine consecutive quarters. At the same time, Lenovo's mobile Internet business made significant progress. The company is now a top-three smart phone maker in China with double-digit market share, and the second-place tablet maker with a market share of 16.5%, far ahead of its competitors in the android market."

As Lenovo states in its press release that they will establish a new facility in the Lenovo Industrial Base in Wuhan, China which is set to begin operation in October 2013:

"As an industry leader, we are aggressively moving forward into the PC Plus era, and with our Mobile Internet Digital Home group actively engaged, we are accelerating development in smart phones, tablets, and other mobile Internet terminal markets," said Yang Yuanqing, Lenovo Group chairman and CEO.

There is much to be said about this announcement and investment of roughly US $790 million over the next five years.  Firstly, Lenovo is known for staying close to its core for many years now, the vertical move to a dedicated facility and group for the "Mobile Internet Digital Home" underscores that mobile computing is the new core for the semiconductor and electronics industry.  Secondly, the regional shift to central China in Wuhan, Hubei Province, underscores the strategic location of the facility for both market regionalization as well as cost improvement by moving away from the coastal higher wage areas in China (see this report on the location from FT).  As also mentioned in the FT article, Lenovo clearly recognizes the importance of the Chinese and regionally close emerging economies as critical markets going forward, and is sticking to its supply chain strategy of relying on internal design and manufacturing to hold close reins on the supply chain.

Meanwhile, globally the competition in the mobile computing and smartphone market continues to ramp up with HTC also releasing news with service provider Verizon, with their unveiling of the HTC Droid Incredible 4G LTE at CTIA 2012 in New Orleans, Louisiana (see this report from PCWorld). Last week, Samsung unveiled the Samsung Galaxy S® III, to become available May 29 and expected US release in June, it is the company's largest and most widespread launch thus far (as commented in this article from Manufacturing Business Technology).

With Apple's 1Q12 release of the new iPad and the expectation of a new iPhone version this summer, the industry is certainly expecting this increase in competition and new product showcasing.  The mobile device sector, especially smartphones and tablets, is forecasted to see continued growth as consumer confidence gains with more acceptance of a sustained, positive, global economic situation, as this report from iSuppli underscores.

At Smith, we have been tracking the increasing importance of mobile devices in the industry from supply chain perspectives as well as demand  and design, hence component driver, perspectives, in our new 2012 MarketWatch Quarterly special series on Mobility.

Lisa Ann Cairns, Ph.D.
Written on Tuesday, 08 May 2012 12:11 by Lisa Ann Cairns, Ph.D.

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