How bad were conditions in the notebook PC market during the second quarter?

So bad that that even the red-hot segment of display panels for touch-screen mobile PCs suffered a sequential decline during the period, according to a new report entitled “Touch Panel Shipment Database – Notebook PC – Q3 2013,” published by IHS.

Shipments of touch-screen panels for notebook PC amounted to 4.4 million units in the second quarter of 2013, down 4.9 percent from 4.6 million in the previous quarter, as presented in the attached figure. Up until the second quarter, shipments of these panels had been skyrocketing, rising by 52 percent in the first quarter, by nearly 3,000 percent in the fourth quarter of 2012 and by 222 percent in the third quarter of 2012.

Despite the sequential decline, the nascent market for notebook touch screens still is expanding explosively on a year-over-over basis, with shipments surging to 8.9 million units in the first half of 2013, up from a mere 53,000 in the first half of 2012.

“The touch-screen notebook market stalled in the second quarter, reflecting generally terrible conditions in the mobile PC segment,” said Duke Yi, senior manager for display components and materials research at IHS. “Shipment growth also was impacted as PC makers prepared new models for introduction in the second half of 2013. The good news for the market is that sequential growth is forecast to recover in the second half, traditionally the peak season for PC product sales, following launches of new product lineups.”

Second-quarter blues

Worldwide shipments of all types of mobile PCs—including both conventional and touch-screen models—shrank a steep 5.1 percent during the April to June period compared to the first three months of the year. This represented the first time the notebook PC market experienced a sequential decline since the second quarter of 2002, during the dot-com bust. The mobile PC industry this time faced tough competition from media tablets, depressing sales.

Area reprieve

While unit shipments declined in the second quarter, the market for notebook PC touch screens actually expanded based on another growth metric: panel area. Mobile PC touch-screen-panel shipments measured in terms of square inches rose by 3.4 percent in the second quarter compared to the first. This indicates that display sizes for touch-screen notebooks are expanding.

Notebook touch panels sized 11.6 inches or smaller accounted for 36.8 percent of total shipments in the second quarter, down from 52.7 percent during the previous quarter. Meanwhile, combined shipments of 13.3- , 14- , and 15.6-inch laptop touch panels, which have emerged as the mainstream sizes, jumped to 57.1 percent of the total market, up from 40.1 percent in the first quarter.

Price plunge

Although touch-panel shipments by area increased quarter-on-quarter, prices of touch panels fell significantly amid intensifying competition. The average selling price of laptop touch panels dropped more than 10 percent, despite growing demand for larger touch-screen panels.

Meanwhile, the utilization of low-end technologies has been on the rise. For example, the use of sodalime for the cover glass of a notebook touch panel has increased, replacing aluminosilicate, which made up 35.7 percent of the cover-glass market in the second quarter, down from 65.7 percent in the previous quarter.

The growing adoption of low-end technologies in the notebook PC sector indicates ongoing efforts in the market to cut touch-panel costs while expanding touch-screen notebook PC displays to be as large as those used in conventional notebook PCs.

Happy as a clamshell

Traditional clamshell PCs in the second quarter accounted for 75 percent of total touch-screen notebooks, up from 58 percent during the same period in 2012. Meanwhile, the market share for high-end detachable-type touch-screen notebook PC fell to 11.5 percent, down from 23.7 percent. Development costs for clamshell notebooks are lower than those of other form factors, prompting greater participation from PC makers.

Amid increasing competition, display supplier TPK Holding Co. from Taiwan lost share during the second quarter in the notebook PC touch-screen panel market. The company’s share of market dropped to less than 50 percent. Meanwhile, AU Optronics Corp., also from Taiwan, and China’s Shenzhen O-Film Tech Co. posted rapid growth during the same period. Notebook PC makers on the whole have been diversifying touch screen panel suppliers to reduce the prices of the panels.

The market for controller integrated circuits (ICs) used for the laptop touch screen panels was also hit by fierce competition. California-based Atmel Corp., which previously led the market, lost ground to Taiwan’s ELAN Microelectronics Corp. in the second quarter. Two other entities expanded their market share—Synaptics Inc., also of California; and eGalax-eMPIA Technology Inc., another Taiwanese maker.

IHS timely published a quarterly “Touch Panel Shipment Database – Notebook PC” report to help them understanding the notebook-use projected capacitive touch panel industry quickly and accurately. The report provides quarterly shipments of touch-screen notebooks by unit/area/value; by inch; by brand; by form factor; by touch panel layer; by touch panel module and controller IC maker; and by cover window materials and bonding type, as well as top five models in terms of shipments.

The report should offer insight into the related market and industry to notebook set makers that are interested in notebook-use projected capacitive touch panels and companies related to touch panel modules, parts and raw materials.