Shipment volume of the Taiwanese wireless local area network (WLAN) industry, including network interface cards (NIC) and access points (AP), will experience annual growth of 84.8% to 113.3 million units in 2005, according to Market Intelligence Center (MIC), a Taipei-based ICT industry research house.

"Taiwanese players are currently expanding their businesses into WPAN (Wireless Personal Area Network) by integrating WLAN and Bluetooth, as well as the major WMAN (Wireless Metropolitan Area Network) technology, WiMAX. All these developments will stimulate high industry growth." explained Yuru Shih, an industry analyst with MIC.

The Taiwanese WLAN industry is comprised of Taiwanese companies that produce WLAN NIC and AP in China and Taiwan for shipment to points throughout the world. Taiwanese output accounts for over 80% of worldwide WLAN supply.

In the second quarter of 2005 Taiwanese WLAN industry shipment volume reached just over 25 million units, year-on-year growth of 91%. Shipment volume of WLAN NICs  stood at 23.5 million units, year-on-year growth of 102.6%, while WLAN AP shipment amounted to 1.7 million units, a year-on-year rise of 14%. Although there was a slight ASP fall, the large volume growth pushed the combined shipment value of NIC and AP to US$405.1 million, a year-on-year increase of 35.5%.

MIC attributes first half volume growth to three main factors. Firstly, Intel continued to increase its orders for Taiwanese makers. Shipment volume of notebook PCs is growing and therein the share of notebooks which use Centrino is rising -- at the end of the second quarter of 2005 65% of worldwide notebook PC shipments used Centrino, according to MIC. Non-Centrino notebook PCs are also increasingly equipped with WLAN modules.

Secondly, DSL (Digital Subscriber Line) routers and IADs (Integrated Access Device) are being pushed by Western European telecoms such as BT, leading to a growing share of WiFi-equipped offerings, which in turn is causing shipments of Mini PCI (Peripheral Component Interconnect) modules to grow.

"The release of Sony's PSP (PlayStation Portable) console in the fourth quarter of 2004 caused quite a stir in the market, not only enjoying strong sales in Japan, but also in North America and other regions in Asia," added Shih. "As orders for wireless modules for PSP are mainly going to Taiwanese makers, shipment volume of NICs managed to stave off the slackening effects of the traditional slow season and continued to grow."

Three major changes were observed in the Taiwanese WLAN industry in the first half of 2005. The emerging technology Multiple-Input Multiple-Output (MIMO) is triggering a new wave of interest. MIMO has a wide range and high transmission speeds, and it is expected to replace 802.11g as the mainstream technology. However, retail prices for offerings using MIMO are quite high and standards have not been yet decided upon, making for lower than forecasted sales.

WLAN is also increasingly entering consumer electronics offerings, such as PSPs and PDAs (Personal Digital Assistant), further pushing industry development. Lastly, Intel introduced its Sonoma platform in the first quarter of 2005, and orders for Centrino continue to increase, with Centrino offerings exceeding 50% of total orders for Taiwanese makers, according to MIC.

Looking forward to the second half of 2005, as the price difference between MIMO and 802.11g decreases, MIC projects that shipments of MIMO offerings will be stimulated. "Taiwanese makers such as Ralink have also been introducing MIMO chipsets, which will lead to price wars, and consequently, lower retail prices," said Shih. "Furthermore, Intel is still aggressively pushing the PCI Express interface, which will provide another choice for high-speed wireless transmission for notebook PCs," Shih added.