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LAN industry gives way to SOHO router shipment hike

Posted: 03 Dec 2002 ?? ?Print Version ?Bookmark and Share

Keywords:soho router? lan? mic? asp? sme?

Taiwan SOHO router annual shipment volume is seen to reach about 5.2 million units by the end of 2002, increasing 280 percent from 2001 and accounting for over 68 percent of worldwide volume, forecasts Market Intelligence Center (MIC). With this increase in demand, Taiwan SOHO router manufacturers are expected to receive more orders as they gain greater self-sufficiency in key components.

According to MIC, lower prices have also driven shipment volume growth: average selling price (ASP) of SOHO routers dropped from $148 in 2000 to $63 in 1H of 2002. Combined with the strong demand in the small and medium enterprise (SME) market, SOHO router shipments continued to grow despite the dot-com shakeout. Shipment volume grew 283 percent from 1H of 2001 to over 533,000 units while shipment value increased over 192 percent, reaching $127.9 million.

With the exception of SOHO routers and WLAN products, most product sectors in the Taiwanese LAN industry saw year on year declines in 1H of 2002. The aggregate shipment value of the Taiwanese LAN industry, which includes NICs, hubs, switches, wireless access points, wireless NICs, and SOHO routers, dropped 3.5 percent compared to the peak volume achieved in 1H of 2001, said MIC.

According to MIC, the Taiwan LAN industry is expected to experience intensifying competition from Chinese manufacturers in the long-term. "Not only have Chinese manufacturers leveraged their economies of scale to manufacture value-line products such as 10/100 NIC, but the large domestic market will also help incubate branded manufacturing with future LAN products. Development of Chinese branded products will likely hinder Taiwanese makers' expansion into China's vast market," said Kelvin Liang, senior industry analyst with MIC.

Further, an even greater threat is the competition Taiwan makers will face from electronics manufacturing service (EMS) providers in the high-end sector. "The relationships EMS providers have developed with international vendors are both closer and broader; they are thus better positioned to develop these high-end LAN markets," said Liang. "To counter this advantage, Taiwanese makers will need to extend their existing level of vertical integration. An expansion of key component production will help reduce the cost of materials purchasing and accelerate product upgrades," Liang added.

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