May 10th saw the U.S.-China trade dispute escalating yet again as the U.S. continues to hike tariffs on US$200 billion worth of Chinese imports, going from 10% to 25%.
TrendForce points out that TVs, monitors, notebooks and other display products were not among the $250 billion worth of goods hit by the 25% tariffs, thus the current impact on panels and the display industry remains to be fairly limited.
However, the research group says that tensions amid the U.S.-China trade war has intensified. China has swiftly responded in retaliation, imposing 5%-25% punitive tariffs of its own on $60 billion worth of goods on May 13. Likewise, the U.S. has released its fourth list of tariffs, including $325 billion worth of China exports among the items to suffer 25% tariffs. Notebooks, which make up a sizeable proportion of imports in revenue, are especially deserving of close attention, according to TrendForce.
The significance of laptops lies in three areas, and one should note that not only are the U.S. and China both harmed by the high tariffs, but Taiwan is also caught up in the storm, per the research group. First of all, nearly 90% of notebooks imported to the U.S. are assembled in China, with Chongqing as its main industrial city for these products. Lacking other production bases of similar scale with highly integrated supply chains for flexible procurement, China will suffer a terrible hit in exports should punitive tariffs begin to fly, according to TrendForce.
Second, the North American notebook market is highly reliant on domestic brands in the U.S.. According to TrendForce’s global shipment statistics for laptop brands 2018, American brands HP, Dell and Apple’s market shares combined comprised up to 66% of the entire North American market.
Looking at it from another angle, shipments for the North American market took up 40~50% of total shipments and formed the main source of business for each of the three giants. If tariffs are imposed on notebooks, American brands will begin to lose competitive power due to elevated costs from tariffs, impacting both business and profits, according to TrendForce. If the tariffs reflect themselves in the end prices for laptops, then there will be good reason to worry whether the North American market, which comprises up to a third of global notebook hipments, will suffer from a stifled sales momentum, adds the research group.
Finally, Taiwan’s suppliers have long accumulated competitive power in and concentrated on notebook manufacturing. The three aforementioned American brands all depend 90% on Taiwan’s suppliers. If punitive tariffs become unavoidable, Quanta, Compal and Wistron may become another center
