Low-cost parts to pave way for tablets under $150

Tablets have become an undisputed highlight for this year's peak season, with cheap, under-$200 devices such as Nexus 7 and Kindle Fire HD poised to gain major attention within the market, added TrendForce.

Considering how Google and Amazon are able to resort to advertising costs and other means to make up for their tablets' low prices, the PC vendors who traditionally rely on hardware sales for profit will be in for some serious competition. TrendForce's research has indicated that as far as hardware costs go, the 7-inch tablet retail prices are unlikely to drop any lower than the current pricing mark.

Given that the display panel and touch module both account for about 35-40 per cent of a tablet's total material cost, they are, naturally, major targets when it comes to controlling manufacturing costs. With the price drops associated with the 7-inch FFS panels halting due to production yield issues, 7in TN panels have now become one of the cheapest display alternatives available. One point worth noting, though, is that the TN LCD's viewing angle is vastly inferior to the FFS's. In order to allow consumers to move their tablet freely and without experiencing visual-based constraints, TN display panels are generally accompanied by Additional wide view angle compensation film. When the TN panel is applied in place of an FFS panel, the total saved cost is estimated to more than half.

For the touch screen, the current modules used by mainstream 7-inch tablets have either a G/G or OGS structure, both of which are over $20 and are burdens for cost-conscious manufacturers. A new touch screen alternative currently gaining a lot of attention is the G/F/F solution. While G/F/F loses to the glass-based structures in terms of transmittance and touch sensitivity, the G/F/F structure's cost is about 70 per cent cheaper than the latter's. Through the replacement of TN panel and the G/F/F touch module, a tablet will be able to trim off an estimated $25 from the overall cost.

When it comes to minimising memory component costs, commodity DRAM is perceived as an ideal option. Compared to 1GB mobile DRAM, which is around $10, 1GB commodity DRAM costs only around $3.5, nearly 65 per cent less than its mobile counterpart. Using low priced, $100 tablets as the basis of calculation, the proportion of production costs accounted by mobile and commodity DRAM translates directly into 10 per cent and 3.5 per cent, respectively. Given that the type of DRAM used affects only the standby time as far as user experience is concerned, in order to lower the cost of future tablets, more and more manufacturers are likely to turn to using commodity DRAM in the future.

With regard to NAND Flash, as mainstream tablets tend to use the eMMC solution, eMMC pricing and densities have become two crucial factors that affect manufacturing cost. The density used by many branded tablets usually begins at 8GB, whereas for the higher-end tablets, the densities can be as high as 32GB or 64GB. With 8GB and 4GB eMMC costing at $6 and $4, respectively, the 4GB version is likely to be preferred choice for many manufacturers, in particular those hoping to keep BOM under $99. Given factors such as pricing and consumer expectations, the momentum of the 4GB eMMC is expected to continue into 2013.

In the CPU department, provided that the low-priced tablets use processor components from China-based manufacturers, TrendForce estimates that the cost per chip will only be around $12, which is about half the amount of the high-end tablets' $24-range processors. Whether the potential low cost tablets will indeed become a major hit remains to be seen, as much of their quality and specs will likely be affected by the costs of the materials used. Nonetheless, should PC branded manufacturers release tablets that cost less than $150, this will certainly put a lot pressure on China's white-box tablets makers, and in turn intensify the pricing competition within the 2013 tablet market.