Shipment volume for SOHO routers continued to rise in the third quarter, thanks to back-to-school season demand. North American brands increased orders to Taiwanese suppliers in June and July, pushing up the timeline for back-to-school production. Inventory adjustments took the steam out of new orders in August, but the slowdown was short-lived as September saw early orders for the holiday season start to roll in. Taiwanese makers also benefited from a rise in corporate demand for routers in Europe during the third quarter, most noticeably in shipment volume for VPN (Virtual Private Network) routers. However, since corporate demand constitutes a small portion of overall router shipments, performance gains in this sector had a limited effect on total shipment volume.

The share of shipment volume held by wired routers rose from 21% in the second quarter to 30% in the third quarter. In comparison, the share of shipment volume held by wireless routers fell sequentially from 76% to 68%. Shipments of wireless routers continue to shift focus to 802.11g devices, and the higher-priced 802.11a/g routers posted slight volume gains for the third quarter. However, the share of shipment volume for wired routers outpaced that of wireless routers because of the price differential. The rise in share of wired routers lowered ASP (Average Selling Price) from US$41.20 to US$40.40.

Propped up by holiday season sales and the ongoing rise in global demand for broadband, Taiwanese router shipment volume will continue to expand in the fourth quarter. What remains to be seen is whether or not massive shipments of wireless ADSL routers since the first quarter will have the expected effect of erosion on wireless SOHO routers. During the first three quarters of 2004, shipment volume of SOHO routers has not grown at the same pace as the number of global broadband subscribers. In light of the above, shipment volume for Taiwanese router makers in the fourth quarter is forecast to rise sequentially by 2% to reach a total of about 4.4 million units.