- Taiwanese server shipments were strong in the third quarter of 2004, as the global server market continued its steady climb. Server shipment volume reached 525,000 units, a new record of 18% year-on-year growth. Sequential growth only registered 2.1% because shipments of Intel's Xeon Nocona came too late in the quarter to generate much market demand, and the price drop for key components was relatively small.
Changes in product mix and assembly levels, along with a rise in unit price among certain manufacturers, brought about a slight increase in ASP (Average Selling Price). Combined with robust shipment volume, total shipment value for Taiwanese servers grew by 19.9% year-on-year and 2.2% sequentially to reach US$457 million in the third quarter.
First tier players continued to increase their share of the server industry in the third quarter. Being disadvantaged in the struggle for orders, second tier makers actually saw orders from brand-name vendors shrink. Clearly, the rise in shipment volume is not extending beyond the first tier and the concentration of new orders in the hands of a few makers is likely to obstruct new entrants.
The high season for corporate procurement typically comes in the fourth quarter, and seasonal effects will help bring some upward pressure to bear on volume. Yet given the uncertainty clouding the global economic outlook for 2005, IT expenditures for 2005 originally planned to begin in the fourth quarter will likely be scaled back. For these reasons, fourth quarter shipment volume for Taiwanese server makers is expected to grow 10.5% sequentially and 16.7% year-on-year, a lower level of performance than witnessed in 2003.