Players in the notebook upstream supply chain expect their gross margin in 2012 to improve as notebook brand vendors are turning their focuses to ultrabooks, which have better profitability compared to the traditional notebooks, according to sources from upstream supply chain.

Although first-tier notebook makers had non-consolidated gross margins of less than 4% in the third quarter - Quanta Computer with 3.2%, Compal Electronics 3.31%, Wistron 3.9% and Inventec 3.8%, with electronics manufacturing service (EMS) providers gradually exiting the notebook manufacturing industry and the price competition has already ceased, the notebook market is expected to soon return to normal with makers' gross margin to also see a recovery.

Most of the notebook brand vendors are also turning away from the netbook market, leaving Acer and Asustek Computer to compete for the market, but the two players have also already switched their battlefield from Europe and the US to emerging markets such as China, India and Indonesia.

As for tablet PCs, although players such as Acer and Asustek have launched quad-core tablet PCs with support of the latest Android system, these players are not paying as much attention to compete against Apple or Amazon like before and are turning their focus back to the notebook market.

With Acer and Asustek both set to simplify their notebook product lines in 2012, after a hard drive shortage improves in the second quarter of 2012 and launch of Intel's upcoming Ivy Bridge and Microsoft's Windows 8, the notebook industry is expected to steadily return to the right track.

However, due to Europe's bond crisis still has not yet being resolved, PC brand vendors currently are still rather conservative over placing orders as the sales performance during year-end holidays in the US and Europe, and the Lunar New Year holidays in China, may not be as strong as expected.