Taiwanese analog modem shipment volume sequentially grew 20.4% to reach approximately 15.6 million units in the fourth quarter of 2003, owing to dramatic growth in PC worldwide PC shipments. Taiwanese desktop and notebook PC shipments, which are tightly linked to global PC market performance, saw sequential growth rates of 16.6% and 28.3% in the fourth quarter of 2003. Although enduring declining adoption rates in desktop PCs due to erosion by broadband, shipments of analog modem-equipped desktop PCs rose owing to brand-name vendor contract awards to first tier Taiwanese computer markers. Additionally, adoption rates of analog modems among notebook PCs remained high; combined with seasonal effects, fourth quarter shipments of notebook PCs using analog modems grew over the third quarter. With gains in volume of both desktop and notebook PCs equipped with analog modems, as well limited room for price declines on chips, ASP (Average Selling Price) dropped only 1.5% from the third quarter. Taiwanese analog modem shipment value climbed 18.5% to reach US$127.9 million.

Taiwanese xDSL equipment shipments grew 21.3% in the fourth quarter of 2003 to reach 6.1 million units. ADSL (Asymmetric Digital Subscriber Line) modem and router aggregately comprised 90% of Taiwanese shipments; volume of such products were driven by promotions rolled out by operators in Germany and Spain, which were supplied by both branded Taiwanese players and international brand-name vendors that had outsourced to first tier Taiwanese makers. With the Chinese and Japanese markets continuing to heat up, Taiwanese makers maintained steady growth in volume owing to existing relationships with outsourcing customers and system integrators. VDSL (Very High Bit-rate Digital Subscriber Line) volume saw 10% growth, deriving from a strong increase in Taiwanese branded maker shipments to Japan. However, as the share in ADSL modem and router shipments increased over the third quarter, and given that prices on such devices dropped by roughly 20%, fourth quarter xDSL ASP dropped 23.3%. The drop in prices offset volume gains, yielding a 7.2% sequential decline in value to US$176.1 million.

Taiwanese cable modem shipments grew 23.1% sequentially to reach approximately 2.2 million units, mainly due to robust seasonal demand in North American and West European markets. Demand in these areas pushed heavy growth in shipments from Taiwanese makers to international vendors and retail channel players such as SA, Terayon, Belkin, and BestData. In terms of product mix, two-way cable modem saw the most substantial growth in the fourth quarter; however, wireless and VoIP (Voice over IP) cable modem both saw considerable growth as well, evidence that the value-added services rolled out by MSOs (Multiple Systems Operator) are beginning to heat up. With the increase in wireless and VoIP cable modem shipments, as well as the resumption of steady supply relationships with customers, ASP decline slowed to 6.6%, hitting US$35.1 in the fourth quarter. Total Taiwanese cable modem shipment value thus achieved a 14.9% sequential gain, reaching US$76.3 million.

In the first quarter of 2004, given steady shipments from brand-name PC vendors in the fourth quarter, inventory factors are not expected to affect PC shipments. With the impact limited to seasonal factors, Taiwanese analog modem volume is anticipated to decline in step with PC shipments at 17.2%. The broadband market in North America and Europe continues to remain strong, and Taiwanese xDSL and cable modem volume are expected to grow 25.0% and 20.3% year on year in the first quarter of 2004. However, coming off the peak season in the fourth quarter, xDSL and cable modem shipments are forecasted to fall 9.9% and 3.0%, respectively.