With gradual economic recovery and mounting corporate IT expenditures, outsourcing from HP, Dell, Sun, and NEC drove a continuation of the growth seen in the Taiwanese server industry during the first half of 2003. Third quarter volume reached a record high, climbing 21.4% year on year to total approximately 445,000 units. Although ASP (Average Selling Price) dropped, volume gains pushed a 18.3% year on year increase in shipment value, which reached US$381 million.

Over recent years brand-name sever manufacturers have revved up outsourcing to lower costs and boost competitiveness and market share. Possessing formidable competitive advantages in rapid design and delivery times, Taiwanese makers have been the direct beneficiaries of such outsourcing strategies, and the scale of Taiwanese server industry OEM/ODM business has continually risen. Although the models outsourced by brand-name vendors are primarily entry-level servers, an increasing shipment share of rack-optimized and blade servers along with a greater number of contracts have offset the fall in component and manufacturing prices. Shipment value hence continued growing.

In the fourth quarter of 2003, with sustained improvement in the global economy and increasing willingness among corporations to procure servers, a greater share of outsourcing by international vendors is expected to drive growth to a new high in shipment volume. Additionally, as brand-name vendors lean ever closer toward open architectures, price pressures will intensify. Given Taiwanese makers capabilities in low-cost, standardized models, Taiwanese players will greatly benefit in the short to mid-term as they receive orders from international vendors.