The U672 from Taiwan's UMEC has a 4in SVGA TFT-LCD panel and uses Windows CE 5.0.

Handheld GPS market sees continued bullish growth ahead, with PNDs also experiencing stronger adoption.

Rising demand worldwide is fueling growth in the GPS device manufacturing industry in mainland China and Taiwan. Handheld GPS products currently lead the overall GPS industry in both regions and continue to experience fastest growth.

Global production of handheld GPS devices will continue on its upward trend from 2007 to 2012 at a compound annual growth rate (CAGR) of 18.2 percent, projects BergInsight. The projected global output this year is 30.73 million units.

In 2007, worldwide shipments of handheld GPS reached 26 million units, a growth of 43 percent from 2006, according to Taiwan's Market Intelligence Center (MIC). Data from MIC report that mainland China produced about 9.16 million handheld GPS devices in 2007, which accounted for about 35 percent of the worldwide output that year. About 7.89 million units of mainland's output was exported and valued at about $150 million. Mainland China is estimated to ship 12.3 million handheld GPS in 2008 for a 40 percent share of worldwide shipments, according to BergInsight.

Portable GPS devices from mainland China, which can be pure handheld devices or can double as in-car devices with mounts or cradles, make up the bulk of the country's total GPS output. At present, shipments of portable navigation devices (PNDs) comprise a small portion of mainland China's GPS production.

PNDs, meanwhile, lead Taiwan's handheld GPS market, which has been growing steadily in recent years. Topology Research Institute (TRI) projects a 49 percent CAGR from 2006 to 2010 for Taiwan's portable GPS industry.

Growing consumer interest in navigation is one of the factors driving the segment in Taiwan. Key vendors are launching value-added handheld GPS. At the same time, the maturing traffic information infrastructure such as radio data system-traffic message channel (RDS-TMC) in Europe pushes key vendors to launch value-added services, such as instant traffic information and weather information.

MIC projects that the worldwide PND production volume, including PDA GPS and ‘pure' PNDs will reach 35.92 million units in 2008, increasing from 26 million units in 2007. Taiwan's output of ‘pure' PNDs is projected to reach 33.6 million units in 2008, an increase of 45 percent from 2007 output.

In 2007, Taiwan's PND output, which included PDA GPS and ‘pure' PNDs, accounted for 19.11 million units or 73 percent of worldwide production. PND export volume is estimated by MIC at 19.11 million units.

A notable increase in demand for Taiwan's PND makers was seen in 2007. These makers hold the majority of production orders from branded PND suppliers such as TomTom, Magellan, Medion, Mio and Navman.

Strong demand and widening applications are boosting the number of makers engaged in handheld GPS production in mainland China and Taiwan.

Mainland China currently has more than 200 suppliers of GPS devices, 95 percent produce handheld GPS. More suppliers are expected to join the market this year.

Taiwan has 30 to 40 portable GPS suppliers. Taiwan makers leverage the island's comprehensive supply chain in GPS manufacturing. Taiwan has a vertically integrated supply base for GPS chipsets, modules, receivers, small to medium LCD panels, human machine interface (HMI), on-board navigation devices, PNDs and geographic information system (GIS).

The main sourcing hubs in mainland China can be found in the Pearl River Delta, Yangtze River Delta and Fujian province.

These regions are also known for producing other electronic and telecom products. Most of the suppliers are based in the cities of Shenzhen, Dongguan and Guangzhou in Guangdong province; Shanghai; and Suzhou and Xiamen in Fujian.

More than 90 percent of the makers in mainland China are small- and medium-scale companies with an average monthly output of 1,000 to 10,000 units. Small companies generally make less than 3,000 handheld GPS a month. Midrange companies produce 3,000 to 15,000 units monthly.

In contrast, large-scale companies can produce more than 15,000 units a month. Some companies' monthly output can reach up to 100,000 units.

Except for a few companies such as Central Pacific Electronics (Shenzhen) Ltd, most mainland China companies are new entrants and consider GPS as their secondary product line. Such makers are also suppliers of telephones, mobile phones, portable media players (PMPs) and other electronic products.

These products have various components and materials in common with GPS, and because they are produced in large volumes, suppliers can easily use existing production lines for handheld GPS products and ensure cost efficiencies.

Mainland China makers offer three main types of GPS devices—professional PNDs, portable GPS and car GPS.

Professional PNDs include professional handheld GPS devices used for outdoor activities such as mountaineering. These products are usually equipped with mono displays and basic maps. They support navigation function, positioning, waypoints and track storage services. This type of GPS product is mostly used in forest, agriculture, mapping, geological and mining applications. The target market remains limited though, according to makers.

Portable GPS products, whose technology is more mature, can be used either as a handheld device or as an in-car system. These products feature mapping service and multimedia functions. These are aimed at the mass market and have a wider sales channel.

Car GPS products have features that are generally similar to those of portable GPS. The difference is that car GPS products have larger screens and are permanently mounted in cars. This type of GPS product is usually sold in auto repair shops and 4S stores. Exports of car GPS take up only 3 to 5 percent of the total shipments in mainland China.

Mainland China makers generally supply low-end and midrange products. The size of the LCD panel and the chipsets used are key indicators in grouping the products into low-end, midrange and high-end.

Low-end products typically use 3.5in LCDs from mainland China or Taiwan suppliers. Midrange products adopt 3.5in to 4.3in LCDs from Samsung or Sharp. Other makers source their LCDs from suppliers in Taiwan. High-end models feature 7in LCDs from Samsung or Sharp. These products also support Bluetooth and TMC.

Basic handheld GPS products feature navigation, voice-guided direction, PMPs, e-books, e-photos and FM radios. These products usually support Secure Digital (SD) cards and USB connectors. The acquisition times are 45s for cold start and 15s for hot start. The maximum position accuracy is 10m.

Mainstream handheld GPS products from mainland China feature 3.5in or 4.3in screens. Some companies offer 4in models. These models usually adopt Samsung 400MHz CPUs and SiRFstarIII chipsets. They support Windows CE OS, 64MB flash memory and 64MB SDRAM.

According to makers, there is little difference between low-end and midrange products, except that the former generally use Samsung 266MHz CPUs.

Makers of handheld GPS devices in Taiwan mainly provide multimedia PNDs and ‘pure' PNDs with embeded GPS receivers. Many new suppliers are developing other handheld GPS products, such as data loggers, personal trackers and photo locators.

'Pure' PNDs from Taiwan generally feature map and voice navigation, touch panels and handwriting input. These products typically list from $99 to $199 each.

Multimedia PNDs feature not only map and voice navigation, but also 3D navigation. Similar to ‘pure' PNDs, these products have touch panels and handwriting recognition. Most units support RDS and TMC. They have Wi-Fi or Bluetooth, and combine AM/FM radio and PMP functions. Most units have memory card slots. Products also support JPEG, MP3 and MPEG formats.

Taiwan-made multimedia PNDs are priced starting at $200 each.

Widescreen touch-panel LCDs are becoming common in Taiwan, particularly in midrange and high-end portable GPS models. Some makers, such as dmedia System Co. Ltd and NCS, offer GPS devices that support IP67 water-resistance.

Taiwan makers source LCD panels for portable GPS devices from Chungwha Picture Tubes Ltd, Lightsonic Optoelectronic Inc. and AUO. For their high-end models, some makers source LCD panels from Samsung.

Taiwan suppliers source GPS chipsets from SiRF for their midrange and high-end products. Some makers cutting down on cost source from u-blox. The local GPS chipset suppliers are MediaTek Inc. and MStar Semiconductor Inc. Many suppliers source GSM or GPRS modules from MTK and Siemens for their GPS trackers.

For GIS, PaPaGo is popularly adopted for PNDs for use in Taiwan and mainland China. Novigon and Netropa are mostly adopted for PNDs bound for Europe and the US, respectively. Some Taiwan GPS companies have acquired license to use maps from Microsoft, Google and VSRI. They also have in-house engineers to design points of interest (POIs) and other value-added GIS capabilities.

Prices of Taiwan's portable GPS devices are expected to decrease by 5 to 10 percent in 2008. Current prices of GPS receivers range from $20 to $30 each.

	Yuer of mainland China is offering the P370 GPS, which features a 3.5in TFT LCD with 320x240 pixel resolution. The unit supports MP3 and MP4 playback, photo review and e-book.

To differentiate their products and rise above the price competition, mainland China makers are optimizing industrial designs (IDs) to meet customer requirements. Suppliers are focusing on trendy, slim and compact form factors with user-friendly interfaces and buttons. More companies are introducing housing designs for specific user groups.

Another strategy that is fast gaining maker support is the integration of value-added functions such as Bluetooth, TMC and DVB-T. Besides general navigation and multimedia functions, Shenzhen Coship Electronics Co. Ltd's high-end handheld GPS devices are equipped with Bluetooth, FM radio and TMC. The company plans to launch a 4.3in handheld GPS that integrates DVB-T.

Shenzhen Yuer Digital Technology Co. Ltd emphasizes product ID due to the similarity of features and functions across GPS products from different companies. The company's new releases come in small form factors and feature user-friendly buttons and stylish designs targeted at female users.

Yuer has 10 handheld GPS models, five of which have 3.5in LCDs. Three models feature 4.3in LCDs. The other two models have 7in LCDs.

Shenzhen Risita Electronics Industry Co. Ltd has 15 models with screen sizes ranging from 3.5in, 4.3in to 7in. The company offers GPS devices under its own-brand, Enavi. Its latest GPS device integrates DVB-T.

Taiwan makers see technology convergence as shaping product trends in the coming months. DVD, MP3 and MP4, GPRS, Wi-Fi, FM and WiMAX will be widely adopted in PNDs. More models will also support DVB-T, DVB-H, RDS-TMC, 3D POI, instant Fix A-GPS, e-compass and voice recognition.

4.3in to 4.8in PNDs are currently mainstream in Taiwan. Models that incorporate multiple functions such as DVB-T, Bluetooth, MP3 playback and TMC are also becoming popular among makers. Some makers will release DVB GPS this year.

The convergence of mobile phone and GPS functionalities is slowly taking root among makers in Taiwan and mainland China. Some suppliers have already released GPS phones.

Taiwan's dmedia develops GPS phones. It released its first GPS phone, the F2, in Q4 2006. It plans to launch its GPS WiMAX phone, the F200, in Q2 or Q3 2008.

dmedia predicts that wireless and intelligent features will be hot trends in H1 2008. It added that design piracy continues to become a challenge. dmedia is improving its design capability by shortening its design and development lead times.

About 20 percent of GPS makers in mainland China are also producers of mobile phones. Thus, it is expected that the same makers will offer GPS phones. In 2008, more GPS phones are expected to be released. Yuer, for instance, has two GPS phones in the pipeline.

Mainland China makers usually buy navigation software and maps from international software providers, which list from $22 to $60 depending on the number and obscurity of covered nations or areas. For example, a map of Eastern Europe is more expensive than that of Western Europe.

Investing in map development is not one of most mainland makers' immediate plans. However, some suppliers can develop other application software for media playback and control system based on Windows CE. Some makers either preinstall the software and maps into their products in their factories or let clients install them into the devices on their own.

Makers expect the price of software and maps to drop in the months ahead. They also expect that maps will cover more areas or regions, as this will encourage user adoption.

Galileo is already supported in some high-end PNDs.

	The YH-3501 from mainland China's Risita has a 3.5in LCD, Samsung S3C2440A CPU and SiRFstarIII chipset.

Many mainland China suppliers adjust their production targets according to market trends and sales situation. Nonetheless, industry observers project a 10 to 30 percent increase in their production volumes in 2008.

Mainland China companies with an average monthly output of 10,000 units handle SMT and software design in-house. There is no company that conducts in-house mold tooling. Small- and medium-scale companies usually outsource mold tooling, plastic injection molding and SMT. Some of these makers subcontract all manufacturing processes and handle only R&D and marketing.

Established in 1997, Risita began to engage in GPS manufacturing in 2005. The company's main products include telephones, VoIP phones, USB phones and banking payphones. Risita makes 6,000 units a month, against a monthly capacity of 20,000 GPS. The company has three assembly lines dedicated to GPS production. It also has subcontracting companies.

Coship specializes in the manufacture and marketing of satellite, cable and terrestrial digital TV receivers, professional head-end IRDs, IP set-top boxes, cable modems, LED displays and GPS products. Coship has 26 SMT lines that are equipped with surface-mount machines from Universal and Hitachi. It has a monthly capacity of 100,000 handheld GPS. Each month, the company produces 30,000 units.

The company is building a new production facility in Longgan district in Shenzhen. It expects the 90,000sqm factory to double the company's capacity for GPS production when it becomes operational.

Yuer focuses on telecom terminal products such as mobile phones and GPS. It carries out industrial, structural and PCB design work in-house. It also does in-house PCB assembly, QC and final assembly. The company subcontracts mold tooling, plastic injection molding and software design. It has a monthly output of 13,000 GPS, against a capacity of 26,000 units.

Many Taiwan handheld GPS suppliers focus on R&D capability and QC programs. They subcontract SMT and assembly to other local companies. They cooperate with ID design houses in Taiwan for the housing designs of their PNDs. Makers interviewed for this report are improving their production efficiency by upgrading their management systems and minimizing product defect rates.

Some companies, such as Universal Microelectronics Co. Ltd (UMEC) and Cheng Holin Technology Corp., have their own factories that partly handle production. UMEC has its own production facility spanning 99,100sqm in Taichung, Taiwan. The company performs SMT and final assembly in this factory.

UMEC has eight R&D design engineers, including four engineers in charge of software and four other engineers handling hardware design. The company is boosting its design capability by shortening the product design and development period.

Cheng Holin runs a factory located in Taipei, Taiwan, which handles product assembly, QC and packaging. The factory is equipped with high-accuracy screen printers, AOI inspection equipment, reflow ovens, high-speed chip placers and high-speed glue dispensers. Cheng Holin's R&D engineers focus on firmware designs for its GPS devices. The company also offers technical support.

dmedia has several EMS partners, including Hon Hai in Taiwan. dmedia can provide 200,000 PNDs a month. It has 120 R&D design engineers handling software and hardware design and 15 QC technicians in charge of IQC. dmedia also has QC technicians in its offices abroad.

Taiwan makers continue to face rising material and labor costs, as well as component supply shortages. Some suppliers noted an increase of 10 to 20 percent in labor cost in their factories in mainland China in 2007. Most of these makers said they have to absorb the additional cost to stay afloat in the stiff price competition.

Many companies are also experiencing difficulties adjusting to new standards and policies. According to makers, profit margins have been narrowing in the GPS segment, which if the situation persists could cause some makers to leave the line.

In terms of component costs, GIS and LCD panels account for the bulk of production cost for many companies. The FOB price of a basic PND is about $130, of which GIS accounts for about $40 and the touch-panel LCD for about $20 to $40.

The majority of makers from Taiwan and mainland China are engaged mostly in overseas OEM and ODM business, although some companies also distribute their products under their own brands. The main export destinations are Europe, North America, Asia and Oceania.

More than 80 percent of Taiwan's handheld GPS makers are exporting their products. Western Europe, North America and Asia are the major export destinations. About 80 to 90 percent of handheld GPS devices are exported to OEM and ODM buyers. The rest is sold under makers' own labels.

dmedia has branch offices in Shanghai in mainland China, Hong Kong, the US and Japan, which handle sales and marketing.

About 5 percent of dmedia's GPS exports are sold under its own brand. Thirty-five percent is sold under OEM and 60 percent through ODM sales.

UMEC projects its exports, particularly to Europe, will increase by up to 10 percent in 2008. The company's major customers are Raymarine and Geonay in the US, and Koden in Japan. About 30 percent of UMEC's GPS exports are sold by OEM sales, and 70 percent of its GPS exports are sold by ODM sales.

OEM and own-brand manufacturing (OBM) are expected to each take up 50 percent of Cheng Holin's 2008 sales. The company also offers ODM service. Ninety-five percent of its output is sold to Europe, the US, Asia and Oceania. The company expects a notable growth in export sales in its US market in 2008.

Eighty-five percent of mainland China's Coship's GPS output is shipped overseas. The major export markets are Western Europe, North America and the Middle East. OEM and ODM combined account for 90 percent of exports. sales. The rest is from sales of its own-brand, Xiangdaoshen.

Eighty-five percent of Yuer's GPS devices are for exports to Western Europe, North America, Australia and the Middle East.

All GPS devices from Risita are exported. Europe absorbs 80 percent of the products. Ten percent goes to North America. The rest is shipped to Asia, Africa and Oceania. Risita plans to adopt GPS chipsets from Atmel and Centrality Atlas to reduce product cost by at least $10.