With Asustek's new 7-inch MeMO Pad HD 7(8GB) priced at around US$129, sources from ODMs believe that other brand vendors are likely to follow suit and US$99 tablets will have a good chance of appearing in the retail channel as soon as the third quarter.

The sources pointed out that many brand vendors are interested in how Asustek was able to offer its tablet at US$129 and feel pressured by the price. Prior to the MeMO Pad HD 7, Acer's Iconia B1 was the cheapest 7-inch tablet, featuring a dual-core processor and priced at US$149.

In addition to first-tier brand vendors, white-box tablet players are also expected to be impacted by first-tier vendors' price competition starting September. Some upstream chipmakers have reduced their forecasts from shipping a total of over 100 million chips to the white-box market to only 80-90 million in 2013.

Currently, although ODM gross margins from the tablet business are similar to that of the notebook business, since tablets are simpler, the ODMs are seeing less profits from component purchases.

By: DocMemory
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