The upswing in Taiwanese WLAN shipment volume was aided by greater notebook PC demand in the back-to-school season. Notebook PC shipments shook off the effects of the sluggish first two quarters and grew by 15% sequentially to reach 12.1 million units. The share of Centrino-equipped NB PCs reached 53%, which gave a boost to NIC module orders to Taiwanese makers. Shipment volume for SOHO routers also grew by 10% sequentially for a total of 4.3 million units, whereas DSL modems and cable modems grew by 6% and 36% respectively. DSL reached 8.7 million units and cable modems moved up to 3.5 million units. With the building wireless trend, and these three products will continue to rank just behind NB PCs as the most important source of growth for Taiwanese makers of WLAN NIC modules. The back-to-school effect in the retail market also helped to dramatically push up shipments of WLAN AP and USB (Universal Serial Bus) interface WLAN NIC from the first half of 2004.

Total shipment value for Taiwanese WLAN makers in the third quarter reached US$344.2 million, an increase of 56% from the third quarter of 2004 and a sequential gain of 15%. Although the Centrino platform's adoption of 802.11g has increased significantly, 802.11g chips prices continued to fall due to the influx of new Taiwanese entrants, resulting in lower 802.11g NIC and AP prices. Third quarter shipment volume for 802.11a/g NIC and AP grew substantially, yet with a dramatic fall in prices coupled with the low share of total volume that 802.11a/g comprises, ASP remained flat.

The fourth quarter arrival of the holiday season will spur growth in shipment volume for Taiwanese WLAN makers. However, holiday orders from two majors markets were received earlier than usual in September, which may mean that orders will start to slow by the middle of November. In which case, shipment volume for Taiwanese WLAN makers should continue to grow in the fourth quarter, but not as spectacularly as in the third. Moreover, with the US Federal Reserve lifting interest rates in September and oil prices expected to soar as high as US$60 per barrel by the year's end, consumer confidence and corporate investment are sure to take a hit. In spite of these mitigating factors, Taiwanese WLAN shipment volume should grow by around 11.2% sequentially in the fourth quarter to reach roughly 18 million units.