Apple iPad or Kindle Fire: outsourcing boom in Asian tablet markets

Telecom Lead India: Made in Asia tablets are finding space in the shelves of global markets. Most of the popular tablets are produced by contract or outsourced manufacturers.

iPad

The percentage of outsourced tablets this year is expected to increase to 89.2 percent, while in-house production will decline to 10.8 percent.

The percentage of outsourced manufacturers’ tablets will increase because popular brands are seeking to minimize operational risks and reduce costs.

In 2011, outsourced manufacturers were responsible for 87.5 percent of tablet production, while 12.5 percent of production was done in-house.

3G and 4G are driving tablet sales in some of the world markets.

According to IDC, Apple, Samsung, Amazon, ASUS and Acer are the top 5 tablet vendors based on volume market share in the second quarter of 2012.

Tablet shipments for the second quarter of 2012 (2Q12) grew to 25 million units from 18.7 million in the first quarter of 2012.

The quarter-over-quarter increase in tablet shipments was 33.6 percent and year-over-year growth was 66.2 percent, IDC said.

IHS said share by outsourced manufacturing of tablets remain in the low 90 percent range, hitting a high of 91.1 percent by 2015 before settling back down at 90.4 percent in 2016.

Tablet brands use outsourcing for many reasons, including faster time to market; the leveraging of capabilities, especially for firmware development and hardware integration; and asset flexibility that translates into reduced corporate expenditures and lower headcount.

The biggest contract manufacturer of tablets is Apple partner Hon Hai of Taiwan, also known as Foxconn. Hon Hai accounted for 62 percent of tablet shipments last year.

For other tablet brands like Samsung and Motorola that choose in-house production, their share of tablet manufacturing is not expected to exceed the 12.5 percent that the collective in-house space saw in 2011.

editor@telecomlead.com