Industry Growth Resumed as Several Entry-Level Branded Servers Begin Shipments in 3Q 2013

According to Lucas Lee, Industry Analyst for Emerging Computing & Applications at MIC, Taiwanese server system shipment volume to top around 1.26 million units in the fourth quarter of 2013, up 10.6% sequentially, while its shipment value will arrive at about US$1.44 billion, up 10.5% sequentially.

The rise of Chinese server brands poses threats on US brands

In the first half of 2013, US branded servers' share in China – which normally accounts for 70% - dropped to around 50%. This is mainly affected by the increasingly strong sales of Chinese brands like Huawei, Sugon, and Lenovo. Normally, 80% of Taiwanese makers' orders are placed by international brands, especially the top-three US brands. Squeezed by Chinese brands, international brands like HP and IBM suffered from negative shipment growth, thereby dampening Taiwan's server shipments as well. In the second half of 2013, sales of US branded servers are expected to resume although they are still much challenged by Chinese brands in China. Nevertheless, as for the major shipment destinations of US branded servers, branded server vendors will be able to still take the advantage of brand competitiveness in regions like North America, Europe, and Japan as they have more comprehensively constructed distribution channels and service locations when compared to Chinese brands. In addition, China-made servers are not up to the standard of US brands in terms of information security. Thus, the shipment of US branded servers in regions outside of China is anticipated to still see constant growth in the second half of 2013.

Taiwanese Server System Shipment Volume, 3Q 2011 - 1Q 2014

Source: MIC, November 2013

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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