- Taiwanese digital subscriber line (xDSL) product shipment volume is forecasted to reach approximately 10.6 million units by the end of 2002, increasing 51.4% from 2001 and accounting for 58% of worldwide shipment volume. However, according to Market Intelligence Center (MIC), second half shipments are expected to decline slightly from the first half due to the slow global telecommunications market and little possibility that telecoms will engage in any large procurement.
This second half decline is also indicative of slowing subscriber growth in North America, while xDSL use still has yet to take off in Europe. Rather, shipments in the first half of 2002 provided the main impetus for 2002 volume growth. Taiwanese xDSL shipments rose 145.2% year on year to reach 5.4 million units, chiefly due to greater demand in Japan, Korea, Taiwan, and China. These four countries saw over 1.4 million new xDSL subscribers combined in the first half, and new subscribers in Japan accounted for over half following steep price cuts in the ADSL market.
The slow global telecommunications market has let to increasingly intense price competition. xDSL average selling price (ASP) dropped 13% in the first half, contributing to shipment value decline of the entire Taiwanese wide area network (WAN) industry. Taiwanese WAN shipment volume, which includes xDSL, cable modems, and analog modems, dropped 3.8% to US$868.4 million from the second half of 2002. Decreased analog modem production also lowered WAN shipment value. "Nevertheless, the fall in value was offset to some extent by orders from new customers and a higher volume of broadband products, which have a higher ASP," said Kelvin Liang, Senior Industry Analyst with MIC.
Looking ahead to future threats faced by the Taiwanese WAN industry, Liang noted that the distinction between the global WAN and local area network (LAN) industries is gradually becoming more blurred. LAN technologies such as Optical Ethernet now have transmission speeds measured in gigabits per second, and are starting to be integrated with metropolitan backbone networks. "Such applications are a potential source of competition for the next generation of WAN technologies such as VDSL and DOCSIS 2.0," Liang added.
The Taiwanese WAN industry is also experiencing competition from China. While at present competition is limited to analog modems, unobstructed access to a vast domestic market and cost advantages of Chinese manufacturers pose a latent threat to Taiwanese players. However, Chinese makers such as ZTE and Huawei have outsourced a portion of WAN production to Taiwanese manufacturers. "Such outsourcing is providing new opportunities for the Taiwanese WAN industry in China, while also creating the possibility of collaboration between Taiwanese and Chinese WAN industries," added Liang.
For more information on the Taiwanese WAN industry, please refer to the report "The Taiwanese WAN Industry, 1H 2002 and Beyond."