According to research of the Taipei-based Market Intelligence & Consulting Institute (MIC) conducted as part of the ITIS project, in the third quarter of 2009 the Taiwanese server industry's shipment volume and value continued to experience year-on-year declines. However, when compared with the weak global market demand in the first and second quarters of 2009, the Taiwanese server industry experienced a slight rebound in the third quarter. The Taiwanese industry's shipment volume of server full systems and barebones in the third quarter of 2009 is estimated at 719,400 units, representing 7.9% year-on-year decline but 14.5% sequential growth. This indicated that brand-name server vendors and contract makers' efforts to control inventory levels have paid off, leading to the gradual easing of the supply-demand imbalance.
According to MIC Senior Industry Analyst Patrick Tung, "supported by the economic stimulus measures taken by governments worldwide, and with the relatively strong economic performance in Asia, especially China, server vendors continued to outsource production of x86 servers and green data centers to Taiwanese makers, benefiting the industry's shipment volume. Consequently, the Taiwanese industry's shipment volume of server motherboards is estimated at 1.04 million units in the third quarter of 2009, up 6.3% sequentially but down 8.1% year-on-year."
Meanwhile, several key component suppliers such as TI and Broadcom have adopted conservative attitudes towards production, resulting in some shortages of key components in the third quarter of 2009. The shortages, however, slowed the ASP decline. Server system and server motherboard ASP of the Taiwanese industry rebounded to US$797.1 and US$191.8 respectively in the third quarter of 2009. Taiwanese sever system shipment value is estimated at US$573.4 million in the third quarter of 2009, down 8.3% year-on-year but up 14.7% sequentially. The Taiwanese server motherboard shipment value in the third quarter of 2009 is estimated at US$200.3 million, down 8.1% year-on-year but up 7.0% sequentially.
As for Taiwanese server system shipment by assembly level, the full-system and barebone shares of total shipment have not changed significantly, but Taiwanese ODM companies have been aggressively trying to obtain full-system orders. The full-system/barebone shipment ratio was 56:44 in the third quarter of 2009. The merger between Oracle and Sun Microsystems came under scrutiny of antitrust authorities of the European Commission, causing uncertainty for Taiwanese makers in terms of orders from Sun Microsystems. It is anticipated that Sun Microsystems' outsourced orders for Taiwanese makers will decline in 2010. Taiwanese makers will have to make strategic adjustments. Strong product design and service capabilities are critical in the contract manufacturing industry.
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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.