- Continuing the growth trend in the first quarter of 2004, Taiwanese server industry shipments reached 514,000 units in the second quarter of 2004, growing 16.8% year on year. Although AMD rolled out the Opteron processor in 2003, it failed to drive replacement demand. Intel in June 2004 rolled out the 64-bit Xeon Nocona CPU (Central Processing Unit), however, it did not receive much of a market response in the second quarter; therefore, overall shipment grew merely 2.2% from the first quarter.
Taiwanese share of higher priced 1U and 2U servers continued to increase and share of lower priced tower and other specification servers dropped below 40%; these two factors have caused the ever-rapid declining ASP (Average Selling Price) to decline slowly in the second quarter. In addition, with shipment continuing to increase, shipment value reached US$447 million, growing 17.6% year on year and 2.1% sequentially.
With competition of worldwide server vendors heating up by the day coupled with expanding influence of the Intel platform, a price war continues to rage between brand name vendors, putting pressure on production costs. The conflict between the server vendors helped Taiwanese makers to increase opportunities for ODM/OEM business. This also brought more orders into the hands of first tier makers, and in the second quarter of 2004, first tier vendor shipments accounted for over 80% of Taiwanese shipment share.
In the third quarter of 2004, with steady corporate market demand, and with Intel and AMD launching chipsets supporting new specifications such as DDR2 and PCI-Express in the third and fourth quarter of 2004 respectively, market scale is anticipated to continue growing. However, with the reliability of the new specifications not yet tested on the market, some enterprises are anticipated to put replacement or new purchases on hold, impacting third quarter growth. Taiwanese server shipments are expected to grow 17.5% year on year and 1.8% sequentially in the third quarter of 2004.