Nearly 83% of notebook computers in 2005 were manufactured by original design manufacturers (ODMs) in the greater Shanghai area, according to a new report by researcher iSuppli.

Worldwide mobile PC production in 2005 amounted to 61.9 million units. In 2005, 82.6% of this production, or 51.2 million units, were outsourced by PC OEMs to ODMs. By 2010, the portion of outsourced PC production will rise to 92.5% or 130.8 million units.

"The vast majority of outsourced mobile PC production is conducted by ODMs, which are headquartered in Taiwan,"says Jeffrey Wu, analyst, EMS and ODM services for iSuppli. However, the ODMs' production facilities are in the greater Shanghai region.

Production of mobile PCs is heavily concentrated among the top five ODMs: Quanta, Compal, Wistron, Asustek and Inventec. These companies account for 67.9% of unit shipments in 2005."

ODM dominate mobile PC production because of standardization of notebook platforms, the maturation of the supply chain in Asia and the ever-rising focus on marketing and sales among PC OEMs.

Mobile PC designs have become standard, and are comprised of well-understood building blocks like the microprocessor, the core-logic chipset, the graphics controller, the memory and Microsoft Corp.'s Windows operating system. Because of standardization, a larger number of ODMs can assume the design and manufacturing of mobile PCs and still keep pace with the technological developments concerning mobile computers.

ODMs produce mobile computers in Shanghai because the supply chain there has matured. Component suppliers and logistics providers tailored a competitive supply chain to serve ODMs. This supply chain, along with the comparatively lower labor rates in China, is encouraging more OEMs to take advantage of the cost savings that can be achieved by ODMs that already have a presence in the region.

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