- Taiwanese switch industry shipment volume reached 32.1 million ports in the second quarter of 2004, growing 58% year on year and 7% sequentially. Shipment value grew 36% year on year and 8% sequentially to reach US$172.5 million.
The increase in shipment growth in the second quarter was a result of the retail market returning to form paired with delayed shipments delivered to customers. In the retail market, with wafer foundry supply returning to normal, Taiwanese switch makers were able to fulfill their first quarter shipment, which led to substantial shipment growth in the second quarter.
In the corporate market, first quarter sales of Gigabit and Layer 3 switches were not as high as anticipated, leading to an inventory pile up for Taiwanese ODM/OEM customers; consequently there was a decrease in orders placed for Taiwanese makers. Taiwanese makers' corporate switch shipment hovered at the same level achieved in the first quarter.
Layer 2 10/100M switches remain the majority of Taiwanese makers' shipment. However, with shipment gradually containing more switches that have additional ports, and added management or POE (Power-Over-Ethernet) functionalities, the fall in price was contained. As switch chipset makers reduced Gigabit chip prices in subsequent quarters, brand name retail vendors showed greater willingness to sell Gigabit switches. Therefore, Taiwanese makers' Gigabit shipment share grew 1% to reach 8% in the second quarter. Resulting from a slower decline in 10/100M switch price and an increase in Gigabit switch shipment share, ASP (Average Selling Price) per port grew slightly 2% to hit US$5.4.
Looking ahead to the third quarter of 2004, back to school demand will drive retail channel vendors to place more orders from Taiwanese makers. Corporate users are also rapidly upgrading, while Taiwanese makers continue to roll out new offerings. Taiwanese switch shipment is anticipated to grow 6.8% sequentially to reach 34.2 million ports.