- Taiwanese switch shipment volume reached 29.1 million ports in the third quarter of 2004, growing 19% year-on-year but declining 9% sequentially. The sequential tumble was due to weak demand in both retail and enterprise markets.
In the retail market, the back-to-school effect did not trigger the heavy sales previously expected, leading to lower volume among all retail brands. Consequently, first tier Taiwanese makers, which mainly produce 10/100M switches, saw a plateau between the second and third quarters, while second tier volume declined.
In the enterprise segment, global Gigabit and layer 3 switch sales did not exhibit the dramatic rise originally predicted in early 2004. 3Com and Nortel's revenue for high-end offerings fell sequentially, while Cisco, Foundry, and Extreme expected flat third quarter sales. Taiwanese enterprise switch shipments thus hit an annual low in the third quarter of 2004.
Shipment value declined 2% sequentially and 21% year-on-year to reach US$136.7 million, reverting away from six quarters of consecutive growth. Value decline was in part due to a lower share of Gigabit and layer 3 switches in Taiwanese product mix. Falling prices also played a hand: lower sales of Gigabit switches inspired price declines among chip suppliers looking to liven up demand.
In the fourth quarter of 2004, Taiwanese switch shipment volume is expected to grow after enduring two quarters of inventory adjustments among customers. Added holiday purchases and the passing of the European vacation period, Taiwanese switch shipment volume is forecast to grow 16% sequentially to over 33.6 million ports.