Booming Notebook PC Sales Sustain Taiwan's WLAN Industry

MIC: In the fourth quarter of 2005, shipment volume of the Taiwanese WLAN (Wireless Local Area Network) industry reached 36.4 million sets, up 72% year-on-year. Of the amount, shipment volume of WLAN NIC (Network Interface Card) hit 34.9 million units, up 84.5% annually, and that of WLAN AP (Access Points) dropped 33.3% annually, to 1.5 million units. Shipment value of Taiwan's WLAN industry amounted to US$491.9 million, for annual growth of 30.5%.

There are several major factors behind the shipment growth of WLAN NIC in the fourth quarter of 2005. One is the increasing demand for notebook PCs, whose global shipment volume reached 18 million units in the fourth quarter of 2005, up 13% sequentially. In addition, Intel continued to place more Centrino WLAN module orders with Taiwanese makers. The soaring sales of value-line computers by Dell, HP, and Acer in North America boosted the shipment volume of non-Centrino computers with built-in Wi-Fi function, leading to marked growth in the shipment volume of Taiwanese WLAN NIC.

Secondly, global shipment volume of DSL (Digital Subscriber Line) CPE (Customer Premise Equipment) rose 15.6% sequentially to 13 million units in the fourth quarter. Due to the promotion of Western European carriers, shipment volume of DSL CPE with built-in Wi-Fi accounted for 40% of the total shipment of DSL routers and IAD (Integrated Access Device), leading to shipment growth of Mini PCI (Personal Computer Interface).

Thirdly, spurred by growing demand for Wi-Fi PDA (Personal Digital Assistant) phones from West European and North American carriers, such as O2, Orange, Vodafone, Verizon, T-Mobile, and Cingular, share of PDA phones with built-in Wi-Fi amid the overall shipment volume of PDA hit 40% in the fourth quarter, further boosting the shipment of SDIO (Secure Digital Input Output) and PCI modules.

Fourth, during the Christmas season, shipment of game console PSP (Play Station Portable) continued to rise. However, due to the substitution of chip-on-board solutions for built-in Wi-Fi module for some PSP, shipment volume of Wi-Fi modules for PSP dropped. However, related products used in other game consoles such as XBOX360 and the game consoles of Nintendo picked up further. With orders from major notebook PC and DSL vendors in hand, Taiwanese WLAN makers saw their shipment volume grow further along with the increased sales of system products.

In the first quarter of 2006, the Taiwanese WLAN industry will develop in several ways. Affected by the off-season, global shipment volume of notebook PCs is projected to drop 16% sequentially, to 15 million units. However, as share of notebook PCs with built-in Wi-Fi is expected to surpass 90%, application of WLAN NIC for notebook PCs will drop slightly. Secondly, in a continuation of the booming business in the fourth quarter of 2005, shipment of DSL in the first quarter of 2006 is expected to hit 13 million units, with share of wireless models exceeding 50%, giving strong growth momentum to the WLAN industry.

In the aspect of consumer electronics, Nokia and HP are scheduled to mass produce Wi-Fi handsets and Wi-Fi softphone, providing more growth momentum. With the continuing increase in notebook PC orders with Taiwanese makers, and with HP planning to outsource the production of Wi-Fi PDA phones to Taiwan, Taiwanese WLAN makers will benefit from the increasing business. Shipment volume of the Taiwanese WLAN industry is expected to reach 39 million sets in the first quarter of 2006, up 76.6% year-on-year.

For the year of 2006, with global shipment volume of notebook PCs amounting to 73 million units and the increasing share of notebook PCs with built-in Wi-Fi, WLAN applications in notebook PCs are expected to grow continuously. Meanwhile, share of wireless DSL is projected to rise to over 60% of the total DSL shipment. Owing to the vigorous promotion of brand handset vendors, shipment share of smartphones and PDA phones with built-in Wi-Fi will experience phenomenal growth in 2006. Amid the rising trend for Wi-Fi softphones, North American brand vendors and Taiwanese makers will continuously roll out such offerings, boosting the shipment volume of the Taiwanese WLAN industry. In addition, thanks to the promotion of Intel, the growing application of Wi-Fi technology in digital-home products will give a strong boost to the shipment volume of Wi-Fi STB (Set-Top Box) and Wi-Fi DMA (Division Multiple Access).

In 2006, 802.11n products will become the main focus of major retail channel players. In the first quarter of 2006, MIMO (Multiple Input Multiple Output) chips conforming to EWC (Enhanced Wireless Consortium) specifications will hit the market and brand vendors are scheduled to mass produce new-generation MIMO products in the second quarter. As the compatibility problem will be solved in the new offerings, consumer' willingness to purchase will rise. Thanks to the compromise between the two major camps of Intel and Airgo, ratification of the 802.11n standard is expected by the end of 2006. Therefore, shipment of MIMO products will grow gradually, breaking their stagnant sales in 2005. In the first half of 2006, shipment volume of the Taiwanese WLAN industry is expected to hit 84.5 million sets, up 76% year-on-year.

Booming Notebook PC Sales Publ 20060317