Taiwan's IPC Equipment Makers Forecast to See Upbeat 2011

The market for Internet-protocol communications (IPC) equipment is projected for steadily growing turnover in 2011 to satisfy brisk demand for wireless applications, including Internet of Things (IOT), cloud computing, and triple-play telecom services.

The global IPC equipment market will rise 8.02-9.3% from 2010's projected US$300 billion, to US$324.6-332.4 billion in 2011, according to the Topology Research Institute of Taiwan, which tracks the information-technology (IT) market. Profiting from such global growth, Taiwan's equipment manufacturers overall are projected to see revenue surge 10.6% from 2010's US$8.5 billion, to US$9.4 billion in 2011.

The TRI points out that IOT, cloud computing and triple-play services will motivate IPC equipment makers to enhance product integration, mobility and intelligence, thereby opening a window of prosperity for 20 years beginning in 2011 for makers of optical-fiber networks, fourth-generation mobile devices, wireless applications, digital-home equipment, IP set-top boxes, Internet-linked TVs, WLAN modules, and dongles.

Optic-fiber to Grow
Over 485 million subscribers of telecom services globally are connected to broadband networks; but barely 10% of them have upgraded connection quality with optical-fiber networks. With aggressive investments in such networks by telecom service providers to offer IP TV service and speedier data transmissions, users of optical-fiber networks will surge an estimated 33% to 64.5 million in 2011.

Such investments, according to the TRI, will be mostly launched in China, Taiwan, Japan, South Korea, European Union and North America; while China will even see the number of its optical-fiber-connected subscribers likely double to 50 million in 2011 from 2010.

In Taiwan, the top-three telecom-service providers—Chunghwa Telecom Co., Ltd., Taiwan Mobile Corp. and FarEasTone Telecom Co., Ltd.—will spend overall NT$50 billion (US$1.6 billion) to set up a digital convergence platform to enable operations via single-bandwidth smart phones, PCs, cable TVs and tablet PCs.

Smart phones and tablet PCs will join other IPC equipment to prompt telecom-service providers to add significant bandwidth to operating networks, paving the way for upgrading mobile connection technology to 3.5 generation, or even 4G, from 3G. The TRI forecasts the market for consumer-end equipment outfitted with the 4G WiMAX (Worldwide Interoperability for Microwave Access) wireless technology to generate revenue up to US$108 million in 2011, up 44% from that in 2010. Meanwhile, the mobile device market underpinned by the 4G Long Term Evolution (LTE) will likely grow explosively beginning 2012 due to vigorous investments by service providers to broaden bandwidth.

The global shipment of Femtocells, an IPC tool used to broaden wireless bandwidth at home, will top an estimated 15 million systems in 2011 in anticipation of steep retail price reduction.

More Digital-home Products
Triple-play telecom service, offering at least three services on a single wireless band, will drive up demand for digital-home products that are embedded with webcam, multimedia, and set-top box functionalities in addition to the basic wired, wireless and voice-over-Internet-Protocol (VoIP) transmissions.

E-Sun Investment Consulting Co., Ltd., a subsidiary of the E. Sun Bank in Taiwan, estimates the global shipment of IP set-top boxes to surge 22.7% from that in 2010, to 24.3 million systems in 2011, with a compound annual growth rate for between 2010 and 2014 of 11.6%, topping the growth estimated for cable and terrestrial boxes.

The consulting firm projects that besides laptops, PCs, and smart phones, digital-home equipment as game consoles, Blu-ray DVD players, tablet PCs, and electronics books will emerge as the next wave to push demand for WLAN-embedded modules, forecasting the global revenue of the module industry to grow 10.7% from 2010 to US$3.98 billion in 2011, around 60% of which to be generated by Taiwan's manufacturers.

The bright future of the IPC equipment market is inspiring many Taiwanese suppliers to tap the opportunity. CyberTAN Technology Inc., a broadband-equipment subsidiary of Hon Hai Precision Industry Co., Ltd., will begin to ship set-top boxes for IP TVs in 2011, totaling an estimated one million systems or so.

IP TV Set-top Box
D-Link Corp. is partnering with the multimedia-application developer Boxee Inc. to develop Boxee Box set-top box for IP TVs, as well as having introduced wireless webcam, wireless broadband routers and Internet storage devices to serve IPC consumers.

ZyXEL Corp. plans to roll out IPC products in 2011for telecom-service providers and enterprises after separating its brand operation from manufacturing operation on Jan. 1.

Having delivered 100,000 Femtocell systems in 2010, SerComm Corp. has shipped the item to major buyers as French service provider SFR and Japanese service provider Softbank. The maker forecasts Femtocell to account for a quarter of its revenue throughout 2011 when the shipment volume reaches 680,000 systems to generate revenue of NT$2.83 billion (US$94 million).

SerComm's brisk shipments will push the company's 2011 consolidated revenue by an estimated 35.45% from a year earlier to around NT$11.2 billion (US$375 million), or pre-global-meltdown level.

So Far, So Good
Even before the encouraging forecasts for 2011 come true, many Taiwanese equipment suppliers have seen better-than-expected sales growth in November.

Netronix Inc.'s November revenue spiked 54% from a month earlier, to NT$911 million (US$30 million), driven by simmering sales of electronic books, with such performance exceeding that of 2010 by a staggering 98.12%. The company expects gross margin for this quarter to steadily increase to that usually seen in the busy second quarter after having cleared inventories in the third quarter.

Hitron Technologies' November revenue totaled NT$744 million (US$24 million), up 81.2% from that of 2009 and rising 13.47% from a month earlier, attributing the strong November revenue mostly to brisk sales of cable modems, which grew 20% from a month earlier to a record high of NT$618 million (US$20 million). Throughout the first 11 months, the company's cumulative revenue totaled NT$6 billion (US$201 million), up 88.69% from that of 2009.

Hitron will begin in 2011 to ship IPC equipment again to Japanese mobile-service operators, with industry executives forecasting Japan-bound shipments by the company in 2011 to double that in 2010.

GemTek Technology Co., Ltd.'s consolidated revenue in November totaled NT$2.3 billion (US$77 million), surging 59% from that in 2009 for a new four-month high. Next year, the company will introduce integrated equipment to serve telecom service providers to further drive growth. (Dec.2010)