- Influenced by steady shipments to the corporate market and retail channels, Taiwanese LAN (Local Area Network) equipment shipment value reached US$272 million, growing 18.6% from the third quarter of 2003. NIC (Network Interface Card) accounted for 9.5% of total Taiwanese LAN value, hub/switch comprised 38.7%, while SOHO router held 51.7%. Compared to the third quarter of 2003, SOHO router value growth was 35.8%, while hub/switch and NIC saw increases of 4.2% and 5.7%, respectively. For all of 2003, Taiwanese LAN value amounted to approximately US$1.3 billion, dropping 6.1% from 2002 due to a fall in NIC and hub/switch value of 36.6% and 14.2%, respectively. Only SOHO router exhibited an increase, rising 16.8%.
The threat facing NIC from LOC/LOM (LAN on Chip/LAN on Motherboard) continues to ferment; however, desktop PC growth of 15% in the fourth quarter of 2003 sparked branded maker shipments as well as demand from private label customers. Additionally, with limited room for further price cuts on the 10/100M NIC that account for over 90% of volume, coupled with a slight increase in Gigabit NIC, ASP (Average Selling Price) rose 2.6% sequentially while shipment value climbed 5.7%.
Taiwanese hub and switch shipments gained ground due to a rebound in the corporate market. Layer 2 10/100M, Layer 2 Gigabit, and Layer 3 switches all saw between 10% to 20% growth, resulting in a 19.1% increase in hub/switch volume in the fourth quarter. However, as prices on the 10/100M switches that comprise 80% of volume fell, and with only slight growth in share of Gigabit and Layer 3 switches, ASP dropped 14.6% sequentially. Shipment value thus gained by only 4.2% from the third quarter.
With aggressive promotions on 802.11b and 802.11g AP routers by international brand-name customers, in the fourth quarter of 2003 share of Taiwanese wireless SOHO routers overtook the share of wired routers. Taiwanese SOHO router shipments grew 20.1% sequentially from the third quarter. The increasing share of 802.11b and 802.11g AP routers and a slowdown in price competition on basic-type, IP sharing routers led the way to 20.2% sequential growth in ASP and 35.8% a increase in shipment value.
Although the demand seen in the fourth quarter is expected to persist into the first quarter of 2004, the sequential growth rate will subside given the high base established in the fourth quarter. In addition, switch makers will be introducing new devices, while SOHO router makers will be focusing on rolling out new 802.11g AP routers. Such product transitions are anticipated to restrict first quarter growth, which is expected to reach 3.1% and 4.7% for Taiwanese hub/switch and SOHO router, respectively. As NIC bears the brunt erosion from LOM and seasonal decline in desktop PC shipments, Taiwanese NIC shipment volume is forecasted of fall 5.4% sequentially.