Although global tablet demand is expected to grow around 60-70% from 130-140 million units in 2012 to 230-240 million in 2013, surpassing notebook shipments, Taiwan may not be able to share the opportunity and is estimated to only grow 24.5% on year to around 120 million units in 2013, according to the Taiwan Market Intelligence & Consulting Institute (MIC).

　　Since entry-level tablet demand is rising quickly and China-based ODMs are already capable of handling production, while at the same time, Taiwan's manufacturing orders for products such as notebooks and digital still cameras (DSC) are declining due to tablets, Taiwan-based ODMs are gradually losing their dominance in the IT manufacturing industry.

　　Global tablet shipments are estimated to exceed 300 million in 2015, surpassing total shipments of PCs of all kinds.

　　Taiwan-based ODM firms need to understand the possible dangers in the industry. Although the tablet market is expected to grow 60% on year in 2013, Taiwan-based makers have been reporting lower-than-expected shipments. In previous years, the firms had reported annual shipment growth higher than the market average growth rate.

　　In particular, although Taiwan-based ODMs have orders from large brands such as Apple, Amazon, Asustek Computer, and Microsoft, profits have been relatively low due to strong competition. For example, at Computex 2013, Asustek introduced the 7-inch Memo Pad HD7 with a price of US$129/unit. If vendors are engaging in price competition when selling end products, it is unlikely ODM firms are seeing big profits.

　　In addition, the improving specifications of smartphones and tablet have effectively curbed demand growth for DSCs, handheld gaming devices, notebooks, and GPS devices. Shipment growth of these products is expected to show an on-year decline of 10-15% in 2013. The decline in orders for consumer electronics will negatively impact Taiwan's ODM industry.

　　Furthermore, China-based ODM firms have been growing strong. According to industry sources, Taiwan-based firms no longer dominate the smartphone ODM industry. Industry sources added that some Taiwan-based vendors have procured handsets from China-based firms in order to market them under their own brand labels.

　　The sale of white-box tablets has been increasing rapidly. The level of difficulty in producing tablets is lower than for other products such as notebooks and this allows China-based small- and medium-size ODM firms to gain manufacturing experience. In addition, China-based ODM firms have been able to produce in smaller quantities while still being cost effective, which is ideal for the tablet market. This allows China-based ODM firms to obtain orders from brands. Market rumors indicate that some tablet ODM orders from brands such as ViewSonic and Hewlett-Packard (HP) have shifted to China-based firms recently.

　　Since the end market is hoping for low-prices, pushing products to become simpler and more cost effective, while China-based ODM firms have begun to solicit orders from top-tier vendors, Taiwan-based ODM firms may be losing market share.