According to research of the Taipei-based Market Intelligence & Consulting Institute (MIC) conducted as part of the ITIS project, Taiwanese WLAN (Wireless Local Area Network) NIC (Network Interface Card) shipment volume reached 36.16 million units in the first quarter of 2009, down 26.3% year-on-year and down 5.5% sequentially, showing that the WLAN industry was going through a rough period. WLAN NIC shipment in the first quarter of 2009 was affected by the relatively weak sales of products such as WLAN USB (Universal Serial Bus) dongles and printers. Furthermore, the market performance of digital photo frames was not strong, and the ratio of products equipped with WLAN NIC was still not high. Worldwide shipment volume of notebook PCs and netbook PCs in the first quarter of 2009 also declined compared to the fourth quarter of 2008.
As for WLAN AP (Access Point), enterprise demand in North America and Western Europe declined considerably, while supply for wireless city projects in China will be concentrated in the second half of the year. Therefore, Taiwanese WLAN AP shipment volume reached 691,000 units in the first quarter of 2009, down 39.2% year-on-year and down 11.4% sequentially.
Upstream chip suppliers in the first quarter took the initiative in lowering chip prices in order to stabilize their client portfolios and cash flows, and reduce inventory levels. Meanwhile, module makers, in order to maintain a certain capacity utilization rate, aggressively re-assessed supply prices to accommodate downstream clients. The unit price declines of all WLAN NIC technologies exceeded double digits in the first quarter. As a result, Taiwanese WLAN NIC shipment value fell 29.7% year-on-year and 9.8% sequentially to US$443 million in the first quarter of 2009. However, as the shipment share of 11n products, which feature relatively high prices, increased significantly to 44.6%, overall WLAN NIC ASP (Average Selling Price) of the Taiwanese industry only fell 4.5% sequentially to US$12.3 in the first quarter.
Enterprise demand was affected by the economic downturn, causing shipment declines of WLAN AP. Taiwanese WLAN AP shipment value fell 48.1% year-on-year and 17.2% sequentially to US$21.2 million in the first quarter. WLAN AP ASP fell 6.6% sequentially to US$30.6.
Starting in March 2009, the industry started to receive rush orders. In the first quarter, capacity utilization rates of upstream wafer foundries, chip, packaging and testing and passive component companies went down to about 50%. Furthermore, inventory levels of upstream chipmakers and downstream manufacturers did not reach regular levels of six to eight weeks; in the first quarter this was mostly four weeks. This led to temporary shortages at the end of the first quarter. Shipments for most orders were delayed to the second quarter. Capacity utilization rates of upstream wafer foundries, chip, packaging and testing and passive component companies are expected to rise to a more normal level of over 80% towards the end of the second quarter. The situation of tight supply will gradually dissolve.
With upstream wafer foundries and packaging and testing companies gradually returning to normal capacity utilization ratios and manufacturers and downstream distribution channels needing to at least replenish two to four weeks of inventories, Taiwanese WLAN NIC shipment volume is expected to reach 41.5 million units in the second quarter of 2009, growing 14.7% sequentially but falling 5.2% year-on-year. Taiwanese WLAN AP shipment volume is expected to reach 735,000 units in the second quarter of 2009, up 6.4% sequentially but down 36.2% year-on-year, marking the third consecutive quarter with a year-on-year decline of more than 30%. Year-on-year growth for WLAN AP shipment volume is only expected to return in the fourth quarter of 2009.
More information can be found in the following MIC report: The Taiwanese WLAN Industry, 2Q 2009
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About MIC
Market Intelligence & Consulting Institute (MIC), based in Taipei, Taiwan, was founded in 1987. MIC is Taiwan's premier IT industry research and consulting firm providing intelligence, in-depth analysis, and strategic consulting services on global IT product and technology trends, focusing on markets and industries in Asia-Pacific. MIC is part of the Institute for Information Industry. https://mic.iii.org.tw/english
About ITIS
The Industry and Technology Intelligence Services (ITIS) project is managed by the Department of Industrial Technology of Taiwan's Ministry of Economic Affairs. As part of the project, research is conducted in a variety of fields, including the ICT sector. The project serves both the public and private sector.