In spite of the slack growth of worldwide DSC (Digital Still Camera) shipment, the Taiwanese DSC industry has been expanding rapidly in 2005. According to the Market Intelligence Center, total shipment volume of the Taiwanese DSC industry is expected to hit nearly 10.4 mln units in Q4 2005 and approximately 32.1 mln units for the whole year, up 51% over 2004, accounting for 44% of world supply. Total shipment value for 2005 is likely to approach $2.8 bln, up 41% YTY.
The world’s major regional markets for DSCs have gradually saturated. Household penetration rates of digital still cameras, for instance, have reached nearly 50% in the US and Western Europe, and exceed 60% in Japan. As a result, overall growth rate of the digital still camera market has slackened. With market growth slowing down and development of product specifications maturing, the DSC market has witnessed acute price competition, forcing the world’s major DSC makers to outsource production to cut down costs.
From Q2 2005, major Japanese and US DSC vendors have continuously released orders, enabling the Taiwanese DSC industry to grow rapidly. In Q3 2005, Japanese makers expanded orders to Taiwanese makers, boosting overall shipment volume of the Taiwanese DSC industry to nearly 9.5 mln units, up 30% sequentially and 60% YTY. Accordingly, shipment value hit $816.7 mln, up 28% sequentially and 49% YTY.
In Q3 2005, Taiwanese makers focused on producing models over 4MP (Megapixels), which accounted for 85% of their total shipment share, much higher than 57% in Q3 2004. With consumers’ demand for higher resolutions, Taiwanese makers have witnessed shipment share over 50% for 5MP and above models from the Q2 2005. Evidenced by the increase in the resolution of mainstream DSCs, Taiwanese makers have gradually narrowed their technological gap with Japanese makers and upgraded their orders from value-line models to higher levels. However, under the acute price competition, market prices for DSC have plunged, with ASP (Average Selling Prices) dropping to $86.3 in Q3 2005.
With the market demand shifting towards high pixels, high optical zoom and slim design, first-tier Taiwanese makers have been actively boosting the percentage of self-produced components as well as implementing forward and backward integration, in order to enhance their competitive edge. Furthermore, they have gradually caught up with Japanese makers in technology and widened their technological gap with second- and third-tier makers. With improved technology and economies of scale, first-tier Taiwanese makers have received increasing amount of orders released by US and Japanese vendors, thereby furthering industrial concentration. In 2005, shipment volume of first-tier Taiwanese makers is forecasted to account for 80% of the total shipment volume of the Taiwanese DSC industry.