Aggregate worldwide broadband product shipments, including cable modems and DSL products but excluding optical networking products, reached 64.25 million units in 2004. Forecasts from Taiwan's Market Intelligence Center (MIC) indicate a 9% growth in 2005, during which shipments will reach 70.08 million units. In 2006, the projected worldwide shipments for DSL products alone is 58.99 million units.
DSL is well positioned for the strongest growth in the overall broadband market, driven by ADSL modems and gateways. The optical networking sector is gaining traction, boosted by faster speed rates. Cable modems, though steady in some markets, are projected to decline.
Taiwan has about 20 DSL product manufacturers, of which 10 are covered in this report. Mainland China has 50 manufacturers, of which 17 companies are profiled in this report. These companies' aggregate output of broadband products reached at least 32.16 million units in 2004, with exports accounting for 74% at 23.66 million units. The estimated combined output for 2005 is at least 48.29 million units, a growth of 50%. The estimated aggregate export volume for 2005 is at least 34.82 million units, up by 47% from 2004 exports.
The profiled companies project an aggregate output volume of at least 69.93 million broadband communication products in 2006, representing a growth of 45% from 2005. Shipments are forecast to rise by 55% to reach at least 54.80 million units.
Production
• Taipei and Hsinchu are the main manufacturing hubs in Taiwan.
• Shenzhen and Dongguan in Guangdong are the key production centers in mainland China.
• Mainland China-based companies produced 17.05 million broadband products in 2004. These makers estimate a 51% increase in 2005 toward an output of 25.72million units. They project another 48% increase in output in2006 at 38.10 million units.
• Taiwan-based companies in this report produced 15.12 million broadband products in 2004. They estimate a 49% increase in production in 2005 to reach 22.57 million units. Their projected output volume in 2006 is 31.83 million units, a 41% increase.
Exports
• Mainland China-based suppliers exported 9.25 million broadband products in 2004, 54% of their total broadband output that year. These companies project an increase of 44% in exports to reach 13.31 million units in 2005. Another 68% increase is expected in 2006 toward 22.32million broadband products.
• Taiwan-based broadband suppliers exported 14.40 million units in 2004, which is equivalent to 95% of their total output. They are projecting an export volume of 21.51 million units by the end of 2005. Their projected export volume in 2006 is 31.76million units.
• Asia, North America and Europe are the main export markets.
Industry Overview
The growing worldwide broadband user base provides a rosy outlook for broadband communication product manufacturing in mainland China and Taiwan. The global broadband market was forecast to exceed 190 million subscribers in 2005. The user population is expected to continue growing to nearly 440 million subscribers by the end of 2010,according to market research company Informa Telecoms & Media. DSL technology will strengthen its lead over cable-based subscriptions with 77% of the worldwide broadband market by 2010, representing 332 million subscriptions versus 76 million for cable.
Broadband market analyst Point Topic reported that during H1 2005, another 24.5 million homes and businesses worldwide moved to broadband. By June 2005, there were 176 million broadband connections, with DSL accounting for almost 75% of total broadband growth in the year. Almost 115 million users subscribe to DSL for broadband access worldwide, with 17.7 million subscribers added in H1 2005, equivalent to more than two and a half times the 6.8 million growth in other broadband technologies.
The September 2005 report from the DSL Forum indicated that more than 8 million users signed up for broadband services in the European Union (EU) alone during the period. DSL subscribers accounted for 81% of the total subscriber base. The EU is now the world's number one region for broadband, taking over from North America, with 47.5 million subscribers
The United States remains the country with the largest broadband population in the world, at 38.2 million subscribers. It recorded a 16% growth in DSL subscribers in 2005, compared with 10% in other broadband access technologies.
Mainland China has been fast-tracking its broadband development and is the first country in the world with more than 20 million subscribers. Of the established DSL nations, the fastest growing are Australia at 40%, the United Kingdom at 37% and Brazil at 27%.
Point Topic said that broadband was on track to achieve at least 200 million global subscribers by the end of 2005,with more than 10 countries achieving 20% market penetration.
ADSL is expected to continue being the dominant broadband technology, as deployments of higher-speed variants such as ADSL2+ continue on an uptake.
However, strong growth is also foreseen for VDSL, especially when used in conjunction with extended fiber deployments for TV over IP applications. Faster-speed DSL options are going to be critical if telcos are serious about offering a true triple play of voice, data and video.
Point Topic, however, indicated slowing subscriber growth in high penetration markets such as South Korea, Hong Kong and Taiwan. This could be countered in emerging markets such as Turkey, Thailand and Poland, which are showing 24% growth or higher in DSL subscribers per quarter.
In Europe, DSL operators are losing market share to companies that offer unbundled services. France Telecom's bundled-service subscriptions fell by 19,000 lines, and those by the Netherlands' KPN fell by 22,000 lines. Fiber-optic technology has been around since the 1970s with the invention of the optical cable. Largely due to the high cost of installing optical fiber, the market growth has been slower than earlier anticipated.
Supplier Profile
AboCom Systems Inc.
AboCom Systems Inc. was established in 1995 as a manufacturer of PCMCIA and modem cards. In February 1996, the company introduced its LAN and fax modem integrated PC card. With increasing demand for information and telecom products, AboCom has been expanding its product range to also cover Wintel-based products such as IA products, high-speed Internet access products, WLAN and storage products. In 1999, the company began producing USB modems and fast Ethernet USB adapters. AboCom has been listed on the Taiwan Stock Exchange under the symbol 2444 since 2000. The company is based at the Hsinchu Science-based Industrial Park in Taiwan. Its R&D center was set up in the same base on 1997. AboCom has two sales branches: one in Taipei and another in Texas, United States. AboCom generates almost all of its sales from its OEM and ODM business. Vendors such as Microsoft have recognized the company as a Gold-Level ODM partner. The major customers of the company include Linsys, Netgear and Yahoo! BB. OEM and ODM sales represent 90% of sales in 2005. The remaining 10% comes from own-brand sales. The company's 2004 annual sales revenue from all products totaled US$126.7 million, of company's which US$86.06 million or 68% is from overseas sales. Japan leads the Asian market with a 45% share of the company's 2004 revenue. North America took 14% and Western Europe took 9% of the company's 2004 sales. Sales of broadband communication products represented 23.7% or US$30 million of the 2004 revenue. Beginning 2005 and throughout 2006, the company plans to strengthen its relationship with first- and second tier ODM customers in Asia, especially in Japan and mainland China, with more extensive pre- and after-sales support. Europe is also a market where AboCom will invest more resources in market development in the coming years. In 2005, the company estimates to have shipped 332,800 DSL repeaters, 71,000 DSL gateways and 71,000 DSL multiplexers from a total shipment of all products of 86.1 million units. The company attends to a number of trade shows regularly such as Computex and CeBIT.
Manufacturing Capability
The company has two factories in Taiwan. One factory is located in Hsinchu. Another factory is located in Miaoli, which is a 30 min drive south of Hsinchu. The company started operating the Miaoli factory in 2004. With a total factory space close to 40,000sqm, the company recorded an output of 6.5 million units of all products in 2004. Broadband communication products occupied about 7.7% ofthe total output. Ninety% of AboCom's products are now produced in Taiwan. The remaining 10% is subcontracted to a factory in Guangdong.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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