The fact that Taiwanese computer network equipment makers have an impressive mass production capability for mature products such as network interface cards, hubs, analog modems, and ISDN is widely recognized. Therefore, despite the fact that the world leading network equipment makers all found themselves in financial difficulties in 2001, Taiwanese makers continued to enjoy reasonable operational performance. The results of MIC latest production and sales survey show that hubs, ISDN, and analog modems are all entering the last stage of their life-cycle. Many Taiwanese makers are still largely reliant on these products. Several examples indicate that the development of niche markets is not necessarily a bad thing from the point of view of Taiwanese makers. The question which these makers have to consider is whether the niche markets are big enough to be shared between Taiwan and makers in other countries and regions.

Taiwanese analog modem manufacturers began to move production overseas several years ago. However, in the broadband modem industry, apart from Kinpo factory in Thailand, all other production remains in Taiwan. In interviews conducted by MIC researchers in the second half of 2001, most makers indicated that they would not be establishing factories in China in the near future. However, the appearance of turnkey solutions has reduced the technical barriers to entry. This, coupled with falling product prices and China huge domestic market is bound to make investing in China an increasingly attractive proposition. There is no getting away from the fact that China telecommunications technology capabilities are far stronger than Taiwan, and that it is catching up with Taiwan in the area of broadband modem technology. Already, there are at least five companies in China with the ability to produce DSLAM products with over 2,000 ports for telecom exchange use. In the future, Taiwanese makers will need to consider not only the size of the market but also how they can improve their competitiveness in terms of technology. The efforts which companies such as Ambit Microsystems, Turbocomm, and Askey have been making to improve their technology deserve recognition, and it is hoped that other Taiwanese makers will use their existing advantages to strengthen their core competencies. If they do not, then within two years the fierce competition from China may turn the broadband modem industry into another sunset industry, like analog modems.