According to the latest research from data analytics company IHS iSuppli, contract manufacturers of notebook PCs experienced a worse-than-expected Q1 2013. This, as shipments to clients the likes of HP and Apple crashed to the lowest level in three years.

The market research firm stated that all of the notebook ODMs (original design manufacturers) are based in Taiwan and are contracted by a large group of companies that include Dell, Lenovo, Acer, Asus and Toshiba, as manufacturing plants for their respective products.

Global shipments of notebooks from these ODMs amounted to 33.2 million units, between January and March 2013. This represents a significant drop of 17% from the 40.1 million units shipped during the final quarter of last year. The loss further marks a reversal from the increase in shipments experienced during Q4 2012 and is also down on a year-on-year basis.

Overall, the decline in Q1 2013 was 4 to 5 percentage points lower than initially forecasted by market research companies such as IHS iSuppli. The company asserts that this performance is indicative of an even more debilitated market, especially since the latest numbers were the worst out of the last 12 quarters.

ODMs hit hard by PC global market slump

Hit hardest by the PC market slump is Quanta Computer, whose shipments are 27% lower on a quarter-to-quarter basis. Quanta receives notebook orders from all the major global PC brands including Sony and Fujitsu. It was most affected by the conservative purchase during Q1 of some of its biggest customers, namely Acer, Asus, HP, and Apple. As a result, the company lost its number one ranking as top notebook ODM to Compal Electronics.

Compal Electronics regained the top ODM spot from Quanta Computer, and its quarterly decline of 7% was the lowest experienced out of all the Top 5 notebook PC ODMs. According to IHS iSuppli, this lowered market drop can be attributed to relatively stable notebook PC shipments to clients like Lenovo and Dell.

For the three other ODMs in the Top 5, the quarterly market decrease in shipments ranged from 9% for fourth placed Inventec, to 16% for Wistron (number 3), as well as 21% for fifth placed Pegatron.

Source: IHS iSuppli June 2013

Q2 prospects expected to improve

Looking forward to Q2 2013, IHS iSuppli expects to see a boost in ODM notebook shipments during the second half of this year. This, as a result of lower-priced ultrathin PCs with new touch-enabled features become available on the market, as well as more capable microprocessors from chipmaker Intel.

In addition, Microsoft will be lowering the license fee for Windows 8 on notebooks, while a screen size of 11.6" or smaller is anticipated to act as an additional incentive for buyers to acquire new notebook PCs.

“Many factors conspired to knock the legs out from under the ODM notebook PC market—such as economic weakness in major markets and the clearance of older models from inventory,” said Peter Lin, senior analyst for compute platforms at IHS. “However, notebook ODMs and their brand-name customers also are contending with the robust competition in the consumer market coming from smartphones and tablets.”

In related news, International Data Corporation recently revealed that thin client PC sales will experience an uptake this year.