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The Taiwanese Server Industry, 2002 and Beyond

March 24, 2003 / Peter Lin

36 Page, Statistics Report

US$1,260 (Single User License)

Abstract

In the face of a sluggish global economy corporate sector IT expenditures shrunk substantially in 2002; worldwide server sales grew less than 5% compared to 2001. Confronted with stagnant market growth international brand-name vendors have launched new servers or slashed prices to expand market share. However, the rollout of new products failed to spark interest in the corporate sector, leaving price competition as the only effective tool with which to attract corporate procurement. To cut costs and bolster competitiveness, international vendors such as IBM and Dell are anticipated further step up outsourcing of value-line models, and HP is gradually getting back on track following the merger. Given Taiwanese players cost advantage combined with growing quality and strong logistical systems, the Taiwanese server industry is expected to see volume growth of close to 13.8% in 2003. In addition to a review of 2002 and quarterly forecast for 2003, this report explores the emergence of blade servers and the mounting challenges facing the Taiwanese server industry. Finally, the long-term impact of Itanium family processors.

List of Topics
Quarterly shipment forecasts up to fourth quarter of 2003 as well as five year forecast. Future challenges facing the Taiwanese server industry. Potential impact of Itanium processor family. Quarterly manufacturer ranking, volume/value, ASP, barebone/full system CPU architecture, uni /dual processor shipments, form factor, and business type shipment statistics by tier, as well as production locations and shipment destinations for 2002.

Acer, Advantech, AMD, Arima, ASUS, Baosight, Compaq, Dell, Delta, FIC, Fujitsu-Siemens, Gigabyte, HP, Intel, Inventec, Iwill, Legend, Mitac, MSI, NEC-CI, Nexcom, Quanta, Sun Microsystems, Tatung, Toshiba, Tyan, USI, Wistron

List of Figures
Figure 1 The Taiwanese Server Industry's Shipment Volume, Shipment Value, and ASP, 1Q 2001 - 4Q 2002

Figure 2 The Taiwanese Server Industry's Shipment Volume by Tier, 1Q 2002 - 4Q 2002

Figure 3 The Taiwanese Server Industry's Shipment Volume by Tier, 2001 - 2002

Figure 4 The Taiwanese Server Industry's Shipment Value by Tier, 1Q 2002 - 4Q 2002

Figure 5 The Taiwanese Server Industry's Shipment Value by Tier, 2001 - 2002

Figure 6 The Taiwanese Server Industry's First Tier Makers' Full System and Barebone Shipment Volume, 1Q 2002 -4Q 2002

Figure 7 The Taiwanese Server Industry's First Tier Makers' Full System and Barebone Shipment Volume, 2001 - 2002

Figure 8 The Taiwanese Server Industry's Second Tier Makers' Full System and Barebone Shipment Volume, 1Q 2002 - 4Q 2002

Figure 9 The Taiwanese Server Industry's Second Tier Makers' Full System and Barebone Shipment Volume in, 2001 - 2002

Figure 10 The Taiwanese Server Industry's ASP by Tier, 1Q 2002 - 4Q 2002

Figure 11 The Taiwanese Server Industry's ASP by Tier, 2001 - 2002

Figure 12 The Taiwanese Server Industry's First Tier Makers' Business Types, 1Q 2002 - 4Q 2002

Figure 13 The Taiwanese Server Industry's First Tier Makers' Business Types, 2001 - 2002

Figure 14 The Taiwanese Server Industry's Second Tier Makers' Business Types, 1Q 2002 - 4Q 2002

Figure 15 The Taiwanese Server Industry's Second Tier Makers' Shipment Volume by Business Type, 2001 - 2002

Figure 16 The Taiwanese Server Industry's Production Locations, 1Q 2002 - 4Q 2002

Figure 17 The Taiwanese Server Industry's Production Locations, 2001 ?2002

Figure 18 The Taiwanese Server Industry's Shipment Destinations 1Q 2002 - 4Q 2002

Figure 19 The Taiwanese Server Industry's Shipment Destinations, 2001 - 2002

Figure 20 The Taiwanese Server Industry's First Tier Makers' Shipments by CPU Architecture, 1Q 2002 - 4Q 2002

Figure 21 The Taiwanese Server Industry's First Tier Makers' Shipments by CPU Architecture, 2001 - 2002

Figure 22 The Taiwanese Server Industry's Second Tier Makers' Shipments by CPU Architecture, 1Q 2002 - 4Q 2002

Figure 23 The Taiwanese Server Industry's Second Tier Makers' Shipments by CPU Architecture, 2001 - 2002

Figure 24 The Taiwanese Server Industry's First Tier Makers' Shipments by Number of CPUs, 1Q 2002 - 4Q 2002

Figure 25 The Taiwanese Server Industry's First Tier Makers' Shipments by Number of CPUs, 2001 - 2002

Figure 26 The Taiwanese Server Industry's Second Tier Makers' Shipments by Number of CPUs, 1Q 2002 - 4Q 2002

Figure 27 The Taiwanese Server Industry's Second Tier Makers' Shipments by Number of CPUs, 2001 - 2002

Figure 28 The Taiwanese Server Industry's First Tier Makers' Shipments by Form Factor , 1Q 2002 - 4Q 2002

Figure 29 The Taiwanese Server Industry's First Tier Makers' Shipments by Form Factor , 2001 - 2002

Figure 30 The Taiwanese Server Industry's Second Tier Makers' Shipments by Form Factor, 1Q 2002 - 4Q 2002

Figure 31 The Taiwanese Server Industry's First Tier Makers' Shipments by Form Factor , 2001 - 2002

Figure 32 The Taiwanese Server Industry's Shipment Volume and Value, 1Q 2003 - 4Q2003

Figure 33 The Taiwanese Server Industry's Shipment Volume and Worldwide Market Share, 2003 - 2007

List of Tables
Table 1 Major Taiwanese Server Manufacturers' Rankings by Tier 1Q 2002 - 4Q 2002

Table 2 Major Taiwanese Server Manufacturers' Rankings by Tier, 2001-2002

As brand-name vendors seek to bolster or boost market share, price competition is inevitable to win business from the corporate sector. However, considering the cautious attitudes persistent in the corporate sector, price cuts are unlikely to cause a significant increase in demand. Worldwide server volume will thus continue to see a slight increase, while value continues to fall.

Although brand-name vendors have stepped up outsourcing of value-line servers, these vendors are increasingly demanding ever-lower costs. Despite the greater opportunities for Taiwanese makers to win more contracts, very little room remains to earn profits unless a sufficient scale of production is reached to wring out what thin profits remain. The growing difficulty that Taiwanese contract manufacturers are encountering in earning profits is prescient of a mounting threat to the Taiwanese server industry.

Faced with slowing market growth and in order to skirt the fate of price competition, pushing toward higher-end, higher-priced servers is the only road out for Taiwanese players. Currently, blade servers and Itanium-based servers open up such a road. In the short term, market share for both of these products will remain low: blade servers have not yet dovetailed into a uniform specification and Itanium-based servers still face a lack of software support and customer confidence. However, over the long term Intel is investing large amounts of capital and design talent into the development of the Itanium processor family. Intel is even willing to provide outsourcing partners with the necessary software support to ensure tandem gains in market share. Considering that open architecture servers have already become the mainstream, once customer confidence is won Itanium-based servers will likely see substantial growth. Additionally, with rising demand for space-saving form factors combined with a trend toward more piecemeal replacement of server systems, the capacity-on-demand characteristics of blade servers are likely to boost shipment volume.

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