On October 2, 2023, the CEO of Alphabet announced that Google, under its umbrella, is partnering with the leading laptop brand, HP, to manufacture Chromebook laptops in India. This move comes at a time when Dell, Asus, and other laptop manufacturers have begun production in India. HP is leveraging its existing local factories and government incentives, aiming to capitalize on the vast population and educational opportunities in India. In a similar vein, Samsung and Google have collaborated in Vietnam to launch the Galaxy Chromebook Go, targeting the education sector. The Chromebook is gradually expanding its production and introduction to various regions.

TrendForce’s Insights:

1. Google Teams Up with HP to Launch Chromebook, Chromebook Plus Aims to Attract New Consumer Segments

Through the collaboration of HP, a dominant player in the global laptop market, and Google, renowned for its software expertise in the Chrome operating system, Chromebooks are set to be manufactured in India for the first time. This partnership leverages the power of two industry giants to produce Chromebooks locally, offering a cost-effective alternative to the long-standing dominance of white label tablets in India’s education market. Chromebooks, equipped with the Chrome OS, known for easy management and robust security, are set to benefit from government incentives and manufacturer collaborations, working together to create affordable, secure, and high-quality devices. This effort aims to enhance the learning experience for Indian students.

HP, since 2020, has been utilizing the Flex Ltd. factory in Chennai, India, for the production of laptops and desktops. On October 2, 2023, they extended their production line to include Chromebooks. The factory will assemble various types of devices, including laptops, desktops, and Chromebooks, all designed to cater to the local market’s needs. This move is expected to enhance HP’s brand value and market share in India.

In addition, Google and various leading brands launched the Chromebook Plus in the North American market on October 8, 2023. The new models come in screen sizes of 14 inches and 15.6 inches, boasting high-end hardware configurations and AI features. The base model starts at $399.99, with a price difference of less than $200 compared to conventional laptops currently sold in India. This suggests the possibility of local production for the Google Chromebook Plus in India, aiming to attract a diverse range of consumers.

2. Apart from India’s policies and incentives, Vietnam also Attracts Foreign Investment with EU Tariff Benefits and Low Labor Costs

India, with its population of 1.4 billion, presents a dual advantage of a vast labor force and a significant domestic market. After the successful local assembly of iPhones in India, the nation is taking strides toward its goal of local manufacturing. The Indian government has initiated the “Make in India” policy, aiming to entice the production, assembly, and shipment of more electronic end-products in the country. In August 2023, the Indian government announced a delayed implementation of import restrictions on computer products, with a decision pending a year later. Currently, many brand manufacturers can still import fully assembled products into India, temporarily avoiding the impact of high tariffs on imported materials and equipment. Brand manufacturers may also utilize this period to actively collaborate with the government in planning local production initiatives in the region.

Beyond India, numerous Taiwanese assembly plants have made investments in Vietnam. In contrast to India’s policy-driven approach to local manufacturing, Vietnam offers advantages such as EU tariff preferences and low labor costs. For example, Samsung has previously established its dominance in Vietnam by assembling panel modules and laptops. As a result, in collaboration with Google, they introduced the Galaxy Chromebook Go in Vietnam, targeting local markets with simplified, lower-end laptop configurations. It is speculated that other Taiwanese manufacturing plants in Vietnam will follow this operating model.

As the overall technological and industrial capabilities in Vietnam continue to improve, they are poised to take on mid to high-end laptop models by 2024-2025. While American brands continue to rely on China for the production of consumer and business laptops, the collaboration between Google Chromebook and other brand manufacturers in regions like India and Vietnam is expected to become increasingly close.

With the approach to the end of 2023, TrendForce revealed the tech trends in every sector, apparently, AI continues as the main focus to decide the direction of how the tech supply chain will be in the next few years, here are the seeings:

CSPs increase AI investment, driving a 38% growth in AI server shipments by 2024

• CSPs increase AI investment, fueling a 38% growth in AI server shipments by 2024.
• Major CSPs like Microsoft, Google, and AWS are driving this growth due to the rising popularity of AI applications, pushing AI server shipments to 1.2 million units in 2023.

HBM3e set to drive an annual increase of 172% in HBM revenue

• Major memory suppliers are set to introduce HBM3e with faster speeds (8 Gbps) to enhance the performance of AI accelerator chips in 2024–2025.
• HBM integration is becoming common among GPU manufacturers like NVIDIA and AMD, and it is expected that HBM will significantly contribute to memory suppliers’ revenues in 2024, with an annual growth rate of 172%.

Rising demand for advanced packaging in 2024, the emergence of 3D IC technology

• Leading semiconductor firms like TSMC, Samsung, and Intel are emphasizing advanced packaging technology’s importance in boosting chip performance, conserving space, reduce power usage, and minimize latency. They’re establishing 3D IC research centers in Japan to underscore this role.
• Generative AI is driving increased demand for 2.5D packaging tech, integrating computing chips and memory with a silicon interposer layer. Additionally, 3D packaging solutions like TSMC’s SoIC, Samsung’s X-Cube, and Intel’s Foveros.

NTN is set to begin with small-scale commercial tests, broader applications of this technology are on the way in 2024

• Collaboration between satellite operators, semiconductor firms, telecom operators, and smartphone makers is growing due to increased satellite deployments by operators. This collaboration focuses on mobile satellite communication applications and bidirectional data transmission under specific conditions.
• Major semiconductor manufacturers are ramping up efforts in satellite communication chips, leading top smartphone manufacturers to integrate satellite communication into high-end phones using the SoC model, which is expected to drive small-scale commercial testing of NTN networks and promote widespread adoption of NTN applications.

6G communication to begin in 2024, with satellite communication taking center stage

• 6G standardization begins around 2024-2025, with initial technologies expected by 2027-2028. This enables novel applications like Reconfigurable Intelligent Surfaces (RIS), terahertz bands, Optical Wireless Communication (OWC), NTN for high-altitude comms, and immersive Extended Reality (XR) experiences.
• Low-orbit satellites will play a key role in 6G as its standards solidify, peaking around the time of 6G commercialization. The use of drones for 6G communication and environmental sensing is also set to surge in the 6G era.

Innovative entrants drive cost optimization for Micro LED technology in 2024

• In 2023, the focus in Micro LED display technology is on cost reduction through chip downsizing, aiming for at least a 20-25% annual reduction. A hybrid transfer approach, combining stamping and laser bonding, is gaining attention for efficient mass production.
• Micro LED holds potential in micro-projection displays for transparent AR lenses. Challenges include achieving ultra-high PPI with 5 µm or smaller chips, particularly with red LEDs’ low efficiency. Various innovative approaches, such as InGan-based red LEDs and vertically stacked RGB LEDs.

Intensifying competition in AR/VR micro-display technologies

• Increasing AR/VR headset demand drives demand for ultra-high PPI near-eye displays, with Micro OLED technology at the forefront, poised for broader adoption.
• Challenges in brightness and efficiency impact Micro OLED displays and their dominance in the head-mounted display market depends on the development of various micro-display technologies.

Advancements in material and component technologies are propelling the commercialization of gallium oxide

• Gallium oxide (Ga₂O₃) is gaining prominence for next-gen power semiconductor devices due to its potential in high-voltage, high-temperature, and high-frequency applications in EVs, electrical grids, and aerospace.
• The industry is already producing 4-inch gallium oxide mono-crystals and advancing Schottky diode and transistor fabrication processes, with the first Schottky diode products expected by 2024.

Solid-state batteries poised to reshape the EV battery landscape over the next decade

• Major automakers and battery manufacturers are investing in solid-state and semi-solid-state battery technologies, aiming for a new cycle of technological iteration by 2024.
• After Li-ion batteries, sodium-ion batteries, with lower energy density, are suitable for budget-friendly EVs, and hydrogen fuel cells offer long-range and zero emissions, primarily for heavy-duty commercial vehicles, with widespread adoption expected after 2025, despite challenges.

BEVs in 2024 rely on power conversion efficiency, driving range, and charging efficiency

• Automakers are optimizing battery pack structures and material ratios to increase energy density and driving range. Solid-state batteries, with high energy density, may see limited installations in vehicles as semi-solid batteries in 2H23.
• The 800V platform will enable high-power fast charging, leading to the expansion of high-power charging stations. AI advancements are driving EVs toward advanced autonomous driving, with Tesla’s Dojo supercomputer investing in neural network training to maintain its position in the intelligent driving market.

Green solutions with AI simulations emerging as a linchpin for renewable energy and decarbonized manufacturing

• Under the background of optimizing energy consumption, creating interconnected data ecosystems, and visualizing energy flow and consumption. Carbon auditing tools and AI are key for organizations aiming to reduce carbon emissions and enhance sustainability.
• The IEA predicts global renewable energy generation to reach 4,500 GW by 2024, driven by policy support, rising fossil fuel prices, and energy crises. The adoption of AI-driven smart technologies in peripheral systems for stable energy generation.

OLED’s expansion will across various applications driven by the innovation of foldable phones

• OLED folding phones are improving in design by using lightweight materials, innovative hinge structures, and cost-reduction efforts to approach the thickness and weight of traditional smartphones.
• In the IT sector, industry players like Samsung, BOE Technology, JDI, and Visionox are making significant investments and developments in OLED technology to expand into various markets. Anticipated advancements in technology and materials are expected to increase OLED market penetration by 2025.

Google focuses on AI and sensor upgrades with Pixel Watch 2, while Charge 6 smart wristbands may stand out in the market through AI applications.

TrendForce’s Insights:

In early October 2023, Google held its annual fall product launch event, introducing new smartphones, smartwatches, earphones, and AI assistant services. Regarding the Pixel Watch 2, Google opted for a relatively conservative upgrade compared to its competitors, with more significant changes expected in the smart wristband market through the application of generative AI.

1. Google’s New Products Align with Industry Trends, Focusing on AI – Pixel Watch 2 Highlights Sensor Upgrades

The third quarter of the year is an important period for major tech companies to hold product launch events. Following Apple’s event in September and the recently concluded Meta event, Google also hosted its Made By Google fall event in early October. Much like these other companies, Google focused on AI as the central theme of the event, enhancing its range of products and services. The highlights of this event include the Pixel 8 series smartphones, featuring AI-powered image editing, the Pixel Watch 2 with new sensors and monitoring capabilities, and the Pixel Buds Pro smart headphones that can adjust audio settings based on the user’s conversations. Additionally, Google, being a leading player in Generative AI, introduced an AI version of its Google Assistant service called “Assistant with Bard,” which is expected to enhance its app offerings through quick organization, predictive capabilities, and content generation, with deployment on a wider range of devices in the future.

A closer look at the specifications of the Pixel Watch 2 reveals that, compared to its predecessor released just a year ago, the hardware upgrades are not substantial. The primary differences include changes in the watch case material to align with environmental concerns, an upgraded processor, and a slight increase in battery capacity. However, the most significant improvements are in the sensors. The Pixel Watch 2 builds upon its existing features by introducing an electronic sensor for continuous skin conductance monitoring and a skin temperature sensor. Additionally, it has replaced the previous optical heart rate sensor with a multi-path sensor, enabling more precise measurements in different physiological conditions. This allows the watch to provide users with more accurate data, including temperature, heart rate variability (HRV), and other metrics.

Enhanced by advanced AI algorithms, the Pixel Watch 2 can analyze users’ sleep quality, stress levels, activity duration, and calorie expenditure. This allows the watch to provide all-day body response tracking, stress notifications, and guided breathing exercises, offering a range of new features.

2. Google Struggles in the Smartwatch Market; Smart Wristbands Poised for Market Differentiation through AI

Google’s latest release, the Pixel Watch 2, follows a strategy similar to that of other major players like Samsung and Apple in the smartwatch market. It represents a modest upgrade with little change in external appearance, and hardware specifications closely align with existing products in the market. On the software front, besides the new stress management features, other additions such as security checks, emergency sharing, and fall detection closely resemble those of the previous generation.

The primary reason for this conservative approach lies in the challenging global economic conditions and a declining industry landscape. Google’s smartwatch products face relative weakness in the market, lacking the extensive user base and brand loyalty enjoyed by giants like Apple, Samsung, and Huawei. Google also lacks the niche market segmentation seen in players like Garmin. These factors collectively position Google in a cautious stance regarding the development of smartwatches.

While Google has displayed a bit of hesitation in the smartwatch sector, its recent introduction, the Fitbit Charge 6 smart band, has garnered significant attention. Although its price exceeds that of the Huawei Band 8 and Xiaomi 8 Active, released later in 2023, by several folds, the Charge 6 leverages Google’s resources and hardware-software upgrades to emphasize its value. For instance, it incorporates a new machine learning algorithm derived from the Pixel Watch, ensuring more accurate heart rate monitoring. This marks Google’s first smart band integrated with Google Apps, offering seamless integration with widely used applications such as Google Maps, Google Wallet, YouTube Music, and more.

Furthermore, Google has hinted at the development of generative AI features during the Made by Google event. These AI-driven features are anticipated to analyze fitness trends and provide insights through chatbots, with potential integration into smartwatches and smart bands. With these advancements, Google aims to elevate its smart bands’ reputation through AI applications, setting it apart in the market, even in comparison to competitors like Huawei and Xiaomi.

1. Gloomy Global Economy Affects Smartwatch Sales, Predicted 2023 Shipments at 130 Million

In 2023, the trajectory of the smartwatch industry is shaped by two major forces. On one hand, it’s driven by the shift in demand from the smart wristband market, becoming a gateway for brand manufacturers to create market momentum on a global scale. However, it also grapples with the impact of the sluggish economy, which affects consumers’ disposable income, leading to a reduction in market demand.

It’s estimated that the market will grow to 130 million units by the end of 2023. Brand manufacturers’ share of shipments hasn’t seen significant changes, and they continue to introduce innovative products. Apple leads with over 30%, followed by Samsung at nearly 10%, alongside Huawei, Garmin, Fitbit and others.

2. Manufacturers Opt for More Cautious Strategies, Focusing on Minor Upgrades and Diversified Research

Given the uncertain landscape, major smartwatch manufacturers like Apple, Samsung, and Huawei are expected to embrace a more conservative development approach. While they will keep innovating and introducing new products, their design philosophy leans towards incremental upgrades.

High-end watch models will be introduced with caution, targeting well-defined niche markets. Furthermore, some brands are likely to venture into other smart wearable devices, but many of these new devices face challenges in terms of data analysis, application integration, and market maturity, which means it will take time before they become commercially viable.

3. AI Focus: Major Manufacturers Prioritize AI Integration for Accuracy and Innovation

Without making substantial changes to their existing structure, companies are proactively utilizing AI technology as the cornerstone of their development strategy. This approach yields benefits such as fine-tuning existing sensor data for more precise measurements and the creation of applications that cater to consumer needs.

As AI applications heavily rely on chip performance and battery life, companies like Apple are upgrading their chips. This move aims to elevate past auxiliary functions into mainstream operations through AI. Moreover, this technology may further integrate with their Vision Pro devices’ gesture controls, enhancing the overall user experience.

TrendForce reports that the second quarter revealed notebook inventory channels displaying healthy levels. Both North America and Asia-Pacific regions are demonstrating a healthy appetite for mid and low-tier consumer models. This isn’t just a race to restock; it’s a strategic move to gear up for the anticipated back-to-school wave in the third quarter. And here’s the zinger—just as Google prepped to roll out its licensing fees, Chromebook shipments hit a peak. This surge propelled Q2 notebook shipments to 42.52 million units, marking a 21.6% quarterly leap. However, a look at the overall picture reveals a total of 77.5 million units shipped in the first half of the year—down 23.5% YoY.

TrendForce further points out that for 2H23, growth momentum is anchored in the purchasing power of end consumers. However, with the economic outlook of the two major notebook markets—the US and Europe—shrouded in uncertainty, the typical seasonal purchasing demand is muted. What’s more, some of this demand was already met in Q2. As a result, Q3 notebook shipments are forecast to witness a moderate growth of 3.8%, tallying up to 44.13 million units. Annual notebook shipments are projected to hit 163 million units, marking a YoY decline of 12.2%.

Gearing up for 2024, the tech horizon looks promising. As market inventories align with healthier metrics and anticipated inflationary pressures begin to stabilize, global notebook shipments are poised for a potential rebound. Yet, it’s not all roses. With the global consumer environment still feeling the pinch, even as demand gradually ticks up, the market hasn’t flashed strong bullish signs just yet. TrendForce projects an annual growth rate hovering between 2–5% for 2024, pushing shipments slightly above pre-pandemic levels. Post inventory adjustments, the broader market is set for a gentle recovery. However, all eyes remain on the twin giants of consumer markets—China and the US—to gauge if we can indeed anticipate a more robust shipment surge.

In the latter half of the year, the absence of seasonal market activity paired with subdued demand has not only impacted corporate profitability but also posed challenges for the upcoming year’s budgeting. Concurrently, the rise of AI and the emphasis on its foundational infrastructure might sideline IT expenditures. While Windows 10 is set to end its support in October 2025, it’s anticipated to spur a wave of business device upgrades starting in 2024. However, TrendForce believes that based on the demand for commercial notebooks, the momentum and urgency of this upgrade wave might be delayed and subdued, making significant shipment growth less probable.

On the consumer demand front, when examining the world’s economic powerhouses, China faces challenges due to a subdued economic and employment environment, casting a somewhat pessimistic view on its market development. In contrast, the US saw a robust rebound in demand in 2023, but anticipations hint at tempered growth in 2024. Europe, after undergoing a two-year demand recalibration, might witness a consumer resurgence in the latter half, should the broader economic climate brighten. Finally, Southeast Asia, buoyed by a burgeoning consumer segment, forecasts upward-trending shipments, indicating a modest growth in consumer-focused devices.

For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Grace Li from the Sales Department at graceli@trendforce.com