On October 2, 2023, the CEO of Alphabet announced that Google, under its umbrella, is partnering with the leading laptop brand, HP, to manufacture Chromebook laptops in India. This move comes at a time when Dell, Asus, and other laptop manufacturers have begun production in India. HP is leveraging its existing local factories and government incentives, aiming to capitalize on the vast population and educational opportunities in India. In a similar vein, Samsung and Google have collaborated in Vietnam to launch the Galaxy Chromebook Go, targeting the education sector. The Chromebook is gradually expanding its production and introduction to various regions.

TrendForce’s Insights:

1. Google Teams Up with HP to Launch Chromebook, Chromebook Plus Aims to Attract New Consumer Segments

Through the collaboration of HP, a dominant player in the global laptop market, and Google, renowned for its software expertise in the Chrome operating system, Chromebooks are set to be manufactured in India for the first time. This partnership leverages the power of two industry giants to produce Chromebooks locally, offering a cost-effective alternative to the long-standing dominance of white label tablets in India’s education market. Chromebooks, equipped with the Chrome OS, known for easy management and robust security, are set to benefit from government incentives and manufacturer collaborations, working together to create affordable, secure, and high-quality devices. This effort aims to enhance the learning experience for Indian students.

HP, since 2020, has been utilizing the Flex Ltd. factory in Chennai, India, for the production of laptops and desktops. On October 2, 2023, they extended their production line to include Chromebooks. The factory will assemble various types of devices, including laptops, desktops, and Chromebooks, all designed to cater to the local market’s needs. This move is expected to enhance HP’s brand value and market share in India.

In addition, Google and various leading brands launched the Chromebook Plus in the North American market on October 8, 2023. The new models come in screen sizes of 14 inches and 15.6 inches, boasting high-end hardware configurations and AI features. The base model starts at $399.99, with a price difference of less than $200 compared to conventional laptops currently sold in India. This suggests the possibility of local production for the Google Chromebook Plus in India, aiming to attract a diverse range of consumers.

2. Apart from India’s policies and incentives, Vietnam also Attracts Foreign Investment with EU Tariff Benefits and Low Labor Costs

India, with its population of 1.4 billion, presents a dual advantage of a vast labor force and a significant domestic market. After the successful local assembly of iPhones in India, the nation is taking strides toward its goal of local manufacturing. The Indian government has initiated the “Make in India” policy, aiming to entice the production, assembly, and shipment of more electronic end-products in the country. In August 2023, the Indian government announced a delayed implementation of import restrictions on computer products, with a decision pending a year later. Currently, many brand manufacturers can still import fully assembled products into India, temporarily avoiding the impact of high tariffs on imported materials and equipment. Brand manufacturers may also utilize this period to actively collaborate with the government in planning local production initiatives in the region.

Beyond India, numerous Taiwanese assembly plants have made investments in Vietnam. In contrast to India’s policy-driven approach to local manufacturing, Vietnam offers advantages such as EU tariff preferences and low labor costs. For example, Samsung has previously established its dominance in Vietnam by assembling panel modules and laptops. As a result, in collaboration with Google, they introduced the Galaxy Chromebook Go in Vietnam, targeting local markets with simplified, lower-end laptop configurations. It is speculated that other Taiwanese manufacturing plants in Vietnam will follow this operating model.

As the overall technological and industrial capabilities in Vietnam continue to improve, they are poised to take on mid to high-end laptop models by 2024-2025. While American brands continue to rely on China for the production of consumer and business laptops, the collaboration between Google Chromebook and other brand manufacturers in regions like India and Vietnam is expected to become increasingly close.

TrendForce reports that the second quarter revealed notebook inventory channels displaying healthy levels. Both North America and Asia-Pacific regions are demonstrating a healthy appetite for mid and low-tier consumer models. This isn’t just a race to restock; it’s a strategic move to gear up for the anticipated back-to-school wave in the third quarter. And here’s the zinger—just as Google prepped to roll out its licensing fees, Chromebook shipments hit a peak. This surge propelled Q2 notebook shipments to 42.52 million units, marking a 21.6% quarterly leap. However, a look at the overall picture reveals a total of 77.5 million units shipped in the first half of the year—down 23.5% YoY.

TrendForce further points out that for 2H23, growth momentum is anchored in the purchasing power of end consumers. However, with the economic outlook of the two major notebook markets—the US and Europe—shrouded in uncertainty, the typical seasonal purchasing demand is muted. What’s more, some of this demand was already met in Q2. As a result, Q3 notebook shipments are forecast to witness a moderate growth of 3.8%, tallying up to 44.13 million units. Annual notebook shipments are projected to hit 163 million units, marking a YoY decline of 12.2%.

Gearing up for 2024, the tech horizon looks promising. As market inventories align with healthier metrics and anticipated inflationary pressures begin to stabilize, global notebook shipments are poised for a potential rebound. Yet, it’s not all roses. With the global consumer environment still feeling the pinch, even as demand gradually ticks up, the market hasn’t flashed strong bullish signs just yet. TrendForce projects an annual growth rate hovering between 2–5% for 2024, pushing shipments slightly above pre-pandemic levels. Post inventory adjustments, the broader market is set for a gentle recovery. However, all eyes remain on the twin giants of consumer markets—China and the US—to gauge if we can indeed anticipate a more robust shipment surge.

In the latter half of the year, the absence of seasonal market activity paired with subdued demand has not only impacted corporate profitability but also posed challenges for the upcoming year’s budgeting. Concurrently, the rise of AI and the emphasis on its foundational infrastructure might sideline IT expenditures. While Windows 10 is set to end its support in October 2025, it’s anticipated to spur a wave of business device upgrades starting in 2024. However, TrendForce believes that based on the demand for commercial notebooks, the momentum and urgency of this upgrade wave might be delayed and subdued, making significant shipment growth less probable.

On the consumer demand front, when examining the world’s economic powerhouses, China faces challenges due to a subdued economic and employment environment, casting a somewhat pessimistic view on its market development. In contrast, the US saw a robust rebound in demand in 2023, but anticipations hint at tempered growth in 2024. Europe, after undergoing a two-year demand recalibration, might witness a consumer resurgence in the latter half, should the broader economic climate brighten. Finally, Southeast Asia, buoyed by a burgeoning consumer segment, forecasts upward-trending shipments, indicating a modest growth in consumer-focused devices.

For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Grace Li from the Sales Department at graceli@trendforce.com

According to a report by Taiwan’s Economic Daily, Google has notified Chromebook manufacturers to start collecting licensing fees from July 1st, prompting laptop brands to accelerate shipments ahead of schedule. As a result of this “urgent order,” Taiwan’s contract manufacturers achieved better-than-expected results in Q2.

In a press release dated July 3rd, TrendForce noted that Google’s formal imposition of Chromebook licensing fees is bound to affect the competitiveness of Chromebooks in the entry-level market. However, laptop brands, in order to avoid incurring additional costs due to licensing fees, are actively advancing Chromebook shipments regardless of having a clear grasp of end-demand orders. This enthusiasm has driven overall Chromebook shipment performance in the second quarter.

TrendForce mentioned that after a seven-quarter adjustment period, education tender orders from North America, Indonesia, and India have begun to emerge for Chromebooks. Additionally, with assistance from the United Nations Children’s Fund, Ukraine’s educational reconstruction needs have also gradually emerged. Nevertheless, due to the off-peak season for Chromebooks in the latter half of the year and the impact of licensing fees, demand is expected to remain subdued compared to the first half.

Furthermore, according to TrendForce’s insights, following Google’s formal initiation of licensing fees, the ODM production costs for consumer-grade Chromebooks have risen by $6 to $8, while business-grade laptops have experienced an increase of $7 to $12. However, considering the stagnation in end-demand this year, brand manufacturers have yet to make any adjustments to end-user pricing.

(Photo credit: Google)

Shipments in the global Chromebook product market are expected to return to pre-pandemic levels in 2023. Mature markets such as the United States and emerging markets such as India and Indonesia will play a key role, primarily due to a small number of education tenders to promote shipments, and this rebound can be expected to continue based on future demand in mature and emerging markets. Global shipments of Chromebook products are estimated to reach 15.9 million units in 2023, an annual increase of approximately 8.2%.

In terms of regional markets, apart from Japan and Europe, the United States is the largest market for Chromebook products, accounting for 90% of the world’s demand for Chromebooks. Supported by a bailout bill proposed by the U.S. government and the developmental policy of the U.S. education market, lower-priced distance learning tools such as educational laptops, entry-level laptops, and tablet computers are gradually forming a bastion of Inelastic Demand.

Emerging markets such as India and Indonesia may become new blue oceans for Chromebooks

It is worth noting that the PC industry looks to emerging markets such as India and Indonesia. Relying on a huge demographic dividend, these countries may become another blue ocean market for Chromebooks after the United States, Japan, and Europe. However, TrendForce believes that emerging markets such as India and Indonesia are currently suffering from rising inflation coupled with economic headwinds such as currency depreciation pressure. Chromebooks, which are relatively inexpensive in mature markets, may hold little allure for the Indian and Indonesian education markets, as white-label tablet products will put competitive pressure on Chromebooks at lower prices. In addition, whether procurement policies for distance learning tools in emerging markets such as “Digital India” can be effective depends on the priority of emerging market governments for budgeting projects. At present, such markets have placed more urgency on improving the quality of infrastructure while education tenders may be sidelined.

（Image credit: Pixabay）

As the Russian-Ukrainian war directly affects Eastern Europe and, indeed, the entire European market, the supply of raw materials has destabilized and prices continued to soar, exacerbating inflation and pummeling the global economy. In addition, lockdowns and work suspensions caused by the recent pandemic outbreak in China and the government’s insistence on a dynamic zero-COVID policy may lead to complex problems such as reductions in factory production efficiency and logistical delays. TrendForce indicates, the uncertainty of current global political and economic circumstances have upset demand for three major display applications including TVs, LCD monitors, and notebooks, overshadowing 1H22 with pressure to correct expectations.

TV panel prices nearly bottomed out, driving demand in TV market remains challenging

In terms of the TV market, due to the deleterious effect of the Russian-Ukrainian war on inflation and assuming consumer budgets remain unchanged, expenditures on non-essential items will fall, deferred demand for TV products. In addition, due to issues in 2021 such as the shortage of cargo containers and port congestion, shipping costs spiked, indirectly inflating the production cost of TV sets. Before the pandemic, shipping costs on a 65-inch TV was US$9. Last year, this jumped to US$50-US$100, scaling with TV size. Even though current TV panel pricing has plunged by 30% to 40% compared to last year’s peak, the fact that freight costs are not expected to improve in 2022 will inevitably affect TV brand promotions and scale of stocking during the peak season of overseas markets in 2H22. Therefore, TrendForce revises downward its TV shipment forecast for 2022, from the original 217 million units to 215 million units, reducing annual growth rate to 2.4%.

Stay-at-home economy effect vanishes, war worries dampen demand, dragging on demand for LCD monitors

In terms of the LCD monitor market, the scale of the 2022 market will be smaller than that in 2021 as the overall market is no longer supported by strong demand from last year’s stay-at-home economy. In addition, relatively stable past demand originating from the European market ran headlong into the Russian-Ukrainian war at the end of February. This, coupled with a subsequent butterfly effect that may lead to a downward revision in demand, as well as problems such as inflation and sustained high freight rates, make it difficult for brands to realize aggressive shipping goals. Therefore, TrendForce preliminarily revises downward its LCD monitor shipment forecast for this year, from 144 million units to 142 million units, expanding annual negative growth rate to 2.3%, without ruling out a possibility of further downward revision.

Notebook demand under downward pressure from inflation and soaring component inventories

In terms of the notebook computer market, TrendForce revises downward its original 238 million unit shipment forecast to 225 million units, a decrease of 8.5% YoY. There are three primary factors to this downgrade. First, Chromebooks benefited from the pandemic driving demand for distance education in 2021, accounting for 15% of total notebook shipments. Chromebook shipments are forecast to decline by more than 50% in 2022 as a whole, disrupting total notebook shipments by approximately 7~10%. Second, the conflict between Russia and Ukraine has caused most notebook brands to suspend shipments to Russia. Russia accounted for approximately 2% of global notebook shipments in 2021 and a suspension will also curb the demand for notebook shipments. Third, every notebook brand has revised 2022 shipment forecasts downward by approximately 10-15% on average compared to the beginning of the year, indicating that inflation has clouded these brand’s future demand outlook. The inventory of the entire supply chain including certain in-transit ODM/OEM components, continues to climb while the prices of some components continue to face downward pressure, resulting in intertwined problems and forcing notebook brands to prudently control purchasing momentum, which may further impact the upstream supply chain.