SHENZHEN, China — When I'm in China, I often feel as though I've dropped into a parallel universe. But worse, once I get back to the good old US of A, I feel even more lost.
This is because I run smack-dab into Western-centric preconceived views on market trends, design requirements, and market leaders that don't often apply to China.
As global as the electronics industry has become today, certain things remain distinctly regional.
In my mind, the tablet market is a good example. For the full calendar year 2013, worldwide tablet shipments totaled 217.1 million units, according to IDC. Meanwhile, China's tablet shipments during the same period are said to be 90 million units, according to China's local reports. That, in fact, translates into China holding a staggering 40 percent share.
China is in fact the world's biggest market for tablets. China makes 'em, China consumes 'em.
While Apple's iPads and Samsung's Galaxy tablets are the two most recognized brands everywhere (including China), the truth is that Chinese OEMs and ODMs -- almost invisible in the Western markets -- are dominating the global tablet market.
The dominance of Chinese OEMs and ODMs is, in turn, creating a huge opportunity for China's application processor companies in the tablet market.
I remember just a short two years ago, a seemingly countless number of China fabless chip companies were all designing similar ARM-core based apps processors for tablets.
When I recently sat down with Eva Wu, marketing manager of Allwinner Technology in Zhuhai, she set the record straight. "Yes," she told me, "there were 10 apps processor vendors in China, all competing for the tablet market in 2012. But by early 2014, those dominating the tablet market are now pretty much down to only three companies -- Allwinner, RockChip, and MediaTek."
I have always felt that a winnowing-down among China's apps processor vendors was necessary and would happen sooner or later. But I didn't expect such a drastic change so quickly.
The following table, compiled by Chinese industry sources, is a snapshot of China's tablet apps processor market. The 2014 market forecast shows a clear upward trend for Taiwan's MediaTek, doubling shipments and holding its own in China.
Tablet Application Processor Vendors for Chinese Tablets
Source: Compilations of China's industry data
It's easy for the Western players to dismiss what's happening in China, on the presumption that "those guys are playing only in the Tier 2 market."
Know your tier 2 players
Maybe so, but I find that knowing your Tier 2 players (the guy below you on the ladder) is vitally important. Some of those players are very ambitious and climbing fast. They have no intention to remain Tier 2 forever.
Allwinner's Wu proudly told me that Allwinner was the first AP vendor to achieve the Android 4.4 Google Mobile Service certification. Noting that the certification tells the world the stability of Allwinner's apps processor, Wu said, "You have to pass the certification test in order to play in the US market. US retailers like Walmart or BestBuy wouldn't accept the products without it."
Know your Tier 2 players in China's tablet market.
Wu noted that Allwinner's apps processors are getting designed into Tier 1 tablets -- such as Sony's tablet projectors and Samsung's tablet designed for printers.
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