China-based vendors Huawei Device and Xiaomi will launch notebooks in 2016 and therefore have released orders to Taiwan-based ODMs. But their orders are lower than originally expected, according to Taiwan-based supply chain makers.

Huawei has placed orders for less than 600,000 units placed with Compal Electronics, while Xiaomi's orders to Quanta Computer and Compal total less than 800,000, the sources said.

The upstream supply chain is feeling the pain, as demand for notebooks continues to slide. Only Apple's MacBook series has been able to achieve strong profit performance. Some smaller notebook vendors such as Sony, Samsung Electronics and LG Electronics have already quit the market or will do so sooner or later.

Huawei's notebook adopts a 10-inch display, a 2-in-1 design and is developed and manufactured by Compal.

Xiaomi internally has an argument about entering into the notebook market and some executives are concerned that the move may repeat its failure in entering into the tablet market, the sources said. As a result, Xiaomi has taken a step back and reduced its shipment target while testing the waters.