The launch of the highly expected iPad 2 indeed serves as a major boost to the share prices of Apple-concept issues but certainly not for those outside the Apple camp, especially those Taiwan-based IC design houses who have failed to enter the supply chain for iPhones or iPads. With Apple having a preference for using IC solutions from international players, the release of the iPad 2 means, once again, that most Taiwan-based IC vendors are left out. For those who have landed IC solution orders from other tablet PC vendors also have something to worry about as the iPad may sweep away the global tablet market.

Leveraging innovative interfaces and software applications, iPods, iPhones and iPads have replaced a number of consumer electronics devices, while pushing down the market capitalization of other brands, including Nokia, Motorola, Hewlett-Packard (HP) and Dell.

Noticeably, even the iPhone-like and iPad-like products launched by white-box makers have failed to affect Apple, as Apple has constantly made its products cheaper and cheaper in cooperation with telecom carriers around the globe.

Meanwhile, end-market device partners of Taiwan-based IC design houses have also seen their market share constantly eroded by Apple, resulting in decreased revenues for local IC vendors since the fourth quarter of 2010, with some still struggling to stop sales from declining in the first quarter 2011.

While the global tablet market looks promising in 2011, local makers of touch panel controller ICs are now concerned about their profits. The reason is that as forecast by DRAMeXchange, the iPad 2 is expected to grab more than 70% of the global tablet market in 2011, leaving Taiwan-based IC vendors and their downstream partners to vie for the remaining 30% of the market with aggressive pricing. The drop of the ASP of touch panel controller ICs from US$5 at the end of 2009 to below US$2 recently highlights the competition.

Apple likes to keep its product roadmap in secret, but Taiwan's IC supply chain is not known for its ability to keep a secret. That is probably a strong reason for Apple to ignore Taiwan-based IC design houses for the iPad.