VoIP product shipments from Greater China totaled at least 10.70 million units in 2004, accounting for 55 percent of the total worldwide shipment of 19.47 million units. Shipments from Greater China in 2005 are projected to grow by at least 87 percent to reach 19.96 million units. This export volume will account for 82 percent of the worldwide shipment volume of 24.46 million VoIP products projected by Taiwan's Market Intelligence Center (MIC). While Greater China's VoIP export volume will increase further to 22.66 million units in 2006, the region's share of the worldwide market will drop to 61 percent. The MIC projects total worldwide shipments of VoIP products will reach 37.18 million units in 2006.
Rising demand for VoIP telephony solutions will drive growth in the worldwide VoIP market. The MIC forecasts a 26 percent growth in worldwide shipments for 2005, and another 52 percent growth in shipments in 2006. Data from Greater China company respondents indicate that production volumes will grow more than 100 percent in 2005 to reach at least 26.33 million units. Another 10 percent growth in output is forecast for 2006, during which the output is expected to reach at least 29 million units. Export volumes will grow by 87 percent and 14 percent in 2005 and 2006, respectively, to reach19.96 million units and 22.66 million units.
Taiwan has about 200 VoIP product manufacturers, of which 20 are covered in this report. Mainland China has 30 VoIP manufacturers, 21 of which are profiled in this report. Hong Kong has 50 to 60 manufacturers, of which five companies are covered.
Production
• Taipei and Hsinchu are the main manufacturing hubs in Taiwan. Shenzhen and Guangzhou in Guangdong are the key production centers in mainland China.
• Several Taiwan-based companies continue to produce their VoIP products in Taiwan, although some have started moving to mainland China. All Hong Kong-owned companies produce their VoIP products in mainland China. Most makers have manufacturing facilities in Shenzhen, Dongguan, Huizhou and Guangzhou in Guangdong.
• Taiwan has been leading VoIP product development and production in Greater China. Taiwan-based companies in this report produced 8.36 million VoIP products in 2004. They are projecting a 40 percent increase in production in 2005 to reach 11.67million units. Their projected output volume in 2006 is 25 percent more at 14.55 million units.
• Mainland China-based companies produced 4.69 million VoIP products in 2004. They are projecting a 212 percent growth in2005 to reach an output of 14.66million units. Makers are projecting a slight drop in output volume in 2006 to about 14.50 million units.
Industry Overview
The worldwide shipment volume of VoIP products is expected to grow by 26 percent in 2005 to reach a total of 24.46 million units from 19.47 million units in 2004. According to Taiwan's Market Intelligence Center (MIC), another 52 percent rise in shipment volume is projected for 2006, when the volume is expected to reach 37.18 million VoIP products.
The worldwide VoIP equipment market will amount to US$8.5 billion in 2008, representing a compound annual growth rate (CAGR) of 41.7 percent, according to data from business consulting firm Frost & Sullivan. The market revenue for wire line VoIP products alone is expected to more than triple between 2004 and 2010,according to market research firm iSuppli Corp. iSuppli forecasts worldwide wireline VoIP equipment revenue to reach US$24.5 billion in 2010,up from US$8.04 billion in 2004.
In 2005, the projected VoIP equipment revenue is US$12.9 billion, an increase of 60 percent from 2004. iSuppli attributes the huge growth this year and in the next five years to the continuous rise in the number of residential VoIP subscribers. The worldwide subscription for residential VoIP is predicted to rise to 197.2 million users by 2010 from 4.8 million in 2004.
The rise in residential VoIP subscribers will boost the residential market, making it the fastest-growing segment of the worldwide VoIP market. iSuppli projects that revenues from the residential VoIP sector will reach US$10.6 billion in 2010, a growthof 650 percent from US$1.4 billion in2004.
In terms of regional distribution, Japan and the US/Canada region will likely experience the strongest growth in the residential VoIP segment. The three regions combined took up 83 percent of the total residential wireline VoIP subscribers as of end-2004. iSuppli predicts that by 2010, the three regions will account for at least 56.4 percent of the total worldwide residential VoIP subscription.
Market data from Frost & Sullivan indicate that North America's VoIP sector is on the brink of incremental growth for the next six years. This region's consumer VoIP market revenue is forecast to reach a value of US$4.07 billion in 2010, an increase of more than 1,300 percent over US$295.1 million in 2004.
The entry of non-telecom companies, such as cable operators and ISPs, into the VoIP market will cause the number of North American VoIP subscriber lines to balloon from 1.5 million in2004 to 18 million by 2010. Frost &Sullivan notes that wider broadband Internet penetration and the availability of low-cost VoIP services are boosting VoIP adoption in this region.
In the enterprise segment, more business operations started adopting VoIP in 2005. Frost & Sullivan estimates that VoIP will account for more than 75 percent of world voice services by 2007. The segment with the strongest growth potential is thecall center market. The IDC projects that call centers will represent nearly 30 percent of the overall VoIP market in the next two years.
The IP PBX segment is poised for a rapid market uptake as well. In-Stat reported that traditional PBX systems represented US$4.75 billion of the total revenue in 2004 or 56 percent of the total. Aggregate revenue from sales of IP PBXs and converged PBXs accounted for the rest. IP PBX revenues were twice that of converged PBXs for the same period, according to In-Stat.
In 2005, IP PBX revenue is expected to grow by 10 percent to reach US$1.38 billion. The projected combined sales from IP PBXs and converged PBXs worth US$4.26 billion are expected to exceed the US$4.12 billion revenue projected from traditional PBXs.
Supplier Profile
Advantage Century Telecommunication Corp.
Established in 1998, Advantage Century Telecommunication Corp.(ACT) started to develop VoIP products using its own engineering resources. The company launched its H.323-compliant IP phones in 1999. In 2005, the company was listed on the Taiwan Stock Exchange. ACT expanded its product line to include Wi-Fi phones and IADs.
Currently, the company offers ODM services for terminal adapters. It makes gateways for private-label businesses. In 2002, the company started manufacturing MGCP gateways. With the emergence of the SIP standard, ACT has been developing most of its new products to comply with SIP.
ACT produces its VoIP products mainly for large OEM and ODM buyers. Its clients include major telecom carriers and service providers such as Yahoo BB, Panasonic and Fujitsu. Furthermore, the company keeps technical partnership with TI, Wind River, Agere and Infineon.
In 2005, the company expects to sell some 700,000 VoIP products, including VoIP phones, terminal adapters and gateways. The company projects that the VoIP market will continue to soar in the near term. By2006, its annual revenue from VoIP is expected to reach US$35 million.
As an export-oriented company, ACT exports mainly to Japan, the United States, Western Europe, East Asia, South Korea and North America.
Manufacturing Capability
For its VoIP products, the company subcontracts its production processes to Forward Electronics, an EMS manufacturer that employs 1,800 workers. The subcontractor has factories in Taipei suburb and Kaoshiung in Taiwan and in Dongguan, Guangdong and Suzhou, Jiangsu. All of the factories have 10 production lines. Forward Electronics produces a wide range of products that include mice, remote controls and LCD modules.
ACT's VoIP products are being produced at the Taipei factory. However, production will be transferred to the Dongguan factory should demand increase.
For all products, the company subcontracts plastic injection, SMT and PCB subassembly to three subcontractors.
The only processes done in-house are final assembly and packaging. The products are packed in color boxes and then delivered within 30 days.
ACT has 20 field application engineers (FAEs) and QC engineers to help buyers develop solutions and to keep production quality in check. The testing equipment include several Agilent instant simulators and some voice quality testers that measure DTMA. The factory also has network analyzers and spectrum analyzers.
Each VoIP product undergoes a series of QC test that comprise inter-operability testing on network and telecom devices.
The company designs its own testing procedures and parameters. Once a product has been developed, ACT generally spends a week of quality and function tests. The company can produce 8,000VoIP phones, 6,000 VoIP adapters and 4,000 gateways. ACT can also generate1,000 VoIP IADs and 1,000 dual-mode Wi-Fi cellular VoIP handsets monthly.
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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