VoIP Products

Mainland China and Taiwan produced over 2.9 million VoIP products in 2004 and are expected to double their output in the next 18 months, as VoIP technology is adopted more and more by corporate and residential users.

This 124-page brings you 48 profiles of manufacturers, based on personal factory visits and exhaustive interviews with senior managers.

Use them to benchmark your existing suppliers, and to pre-qualify new producers that can help you profit from the rapid changes in mainland China's and Taiwan's VoIP product industries.

Plus benefit from an in-depth overview of the VoIP product supply market, including details on production trends, R&D plans, product developments and other key issues that will impact your sourcing in 2005 and beyond.

What you'll get

Profit from 24 in-depth profiles of key producers, with a detailed look at their manufacturing capacities, export strategies, and product development and QC plans

Assess 24 additional suppliers using concise profile tables that highlight key sourcing information including factory locations, production capabilities, export markets and product certifications

Compare 117 popular export VoIP products, including gateways and phones, using a product gallery that features key specifications and full-color pictures

Pre-qualify manufacturers that supply the world's leading corporations, including AT&T, Fujitsu, Mitsubishi, NEC, Oki, Panasonic and Yahoo!

How you'll benefit

Get advanced notice on exciting new features that are being integrated into upcoming product releases

Gauge manufacturers' suitability for your needs by identifying their technology partners and understanding their inspection processes

Discover the advantages and pitfalls of sourcing from different regions in mainland China and Taiwan, with a special sourcing center report on Guangdong province

Access quick-to-use summary listings covering all featured suppliers, with easily comparable statistics plus verified contact details and website addresses

Executive summary

About 75 percent of the VoIP makers included in this report expect an increase of at least 94 percent in their output in the next 12 months. In Taiwan, volume production is forecast to reach 4.20 million units by end-2005, an increase of over 50 percent from 2004. Taiwan has about 50 VoIP product makers. The technical strength of Taiwan makers and their ties with global VoIP giants make the island a major force in global VoIP manufacturing.

Output in mainland China is expected to decline. By the end of 2005, unit production is projected to fall by 13 percent to 667,420 units from 764,210 units in 2004. The forecast slowdown stems from a surge in production in late 2003 and early 2004 as makers prepared for rising demand due to the announced deployment of VoIP services by providers. But with VoIP services yet to take off on the mainland, makers are faced with a huge inventory of products, and thus need to reduce their production to clear out the supply glut.

Forty-three percent of makers in mainland China are based in Guangdong. The rest are scattered in Hebei, Guangxi, Shandong, Shanghai and Zhejiang. The VoIP sector in mainland China is concentrated on a core of 20 makers, although there are over 50 VoIP suppliers in the country.

In terms of production, the findings of this report include:

• Taiwan and mainland China makers produced at least 2.93 million units in 2004. Their combined output is expected to nearly double in 2005 to 4.87 million units. The mainland China market alone is forecast to reach US$100 million in production value in 2005.

• More than 40 percent of Taiwan companies and 60 percent of mainland China makers have manufacturing experience spanning less than five years.

• The VoIP segments in mainland China and Taiwan are forecast to experience robust sales in 2005. The combined sales turnover of the interviewed companies reached US$256.87 million in 2004. By the end of 2005, aggregate sales revenue is estimated at US$464.27 million.

• Fifty-eight percent of the Taiwan companies are projecting sales revenues to increase by 100 percent or more. About 25 percent anticipate growth of 50 to 99 percent, and 17 percent expect sales growth of up to 50 percent.

With regard to exports, among the key points are:

• Mainland China companies forecast about 60 percent growth in export volume in 2005. As of end-2004, surveyed mainland companies shipped about 240,000 units. In 2005, exports are expected to reach 375,000. About 50 percent of their total output in 2005 will be earmarked for exports.

• More than 75 percent of the surveyed Taiwan companies project 89.74 percent rise in exports in 2005. Exports will account for about 79 percent of the aggregate production in 2005.

Industry overview

Voice over IP (VoIP) is one of the fastest-growing technologies in the worldwide telecom industry.

International Data Corp. (IDC) forecast the global market to grow at 47 percent. CAGR is expected to jump from US$300 million in 2003 to US$1.5 billion by 2007. Gateways and softswitches alone are projected to expand from US$110 million in 2003 to US$840 million by 2007. Shipments of VoIP phones are expected to reach 6.6 million units in 2004, up by 43 percent from 4.6 million units in 2003, according to In-Stat/MDR.

The main growth driver for VoIP lies in the huge cost savings resulting from providers' ability to charge for only one service — users can place calls over the IP network at much lower costs. The maturing technology allows for the provision of e-mail, voice mail, instant messaging, on top of voice and data communications over a single network.

At present, VoIP has a more widespread adoption in the corporate environment. The first generation of products, mostly gateways, were designed for business applications. However, the entry of standalone VoIP phones signals the expansion of the market to include residential users.

Mainland China and Taiwan expect to produce at least 2.93 million VoIP products in 2004.

In contrast, the Industrial Economics and Knowledge Center (IEK) forecast production in 2004 in Taiwan alone to reach 2.78 million units, and grow by 41 percent to reach 3.96 million units in 2005. Our survey of profiled companies indicate that Taiwan makers' output will reach a minimum of 2.16 million units in 2004. It will increase to 4.20 million VoIP products in 2005, a growth of 94 percent.

Manufacturing centers
Delays in large-volume OEM and ODM orders to Taiwan-owned companies have decreased production of some suppliers. Nonetheless, the island is expected to ship almost double the volume in 2004 compared to 2003. More companies will likely enter the line in 2005, thanks to the huge growth prospects and the rising supply of chipsets and platform solutions.

The main production center for VoIP products in Taiwan is Taipei. Being a technology-intensive product line, many companies still prefer to handle production in Taiwan, although 28 percent of the companies in this report have mainland China operations. In addition to Taipei, the other areas where there are significant concentrations of VoIP R&D and production are Hsinchu, Taichung and Kaohsiung.

Major players in Taiwan, such as Alpha Networks Inc. and Askey Computer Corp. have base operations in both mainland China and Taiwan. Among Taiwan companies with factories in Taipei are Advance Wireless Technology (AWTek), Advantage Century Telecommunication, Askey, Auto Telecom, Comtrend, DSG Technology, eMorse, EZTone United, Fedtech Communications, G-card Technology, Octtel Communication, Projectek Networking Electronics, Quantway, Senao International, Taiwan Telecommunication Industry, Tonnet Telecommunication International, ViDa Communication, Vodtel Communications, Welltech Computer and Xavi Technologies. In mainland China, the key sourcing centers for VoIP products are Guangdong and Shanghai. Production is also carried out in Zhejiang, Hebei, Shandong and Guangxi provinces.

Samples of supplier profile

Advantage Century Telecommunication Corp.
Established in 1998, Advantage Century Telecommunication Corp. (ACT) manufactures VoIP phones, terminal adapters and gateways. The company exports mainly to Japan, the United States and Europe. Japan is ACT's largest export market, accounting for about 50 percent of its export sales.

The company produces its VoIP products mainly for large OEM and ODM buyers, major telecom carriers, and service providers such as Yahoo BB, Panasonic and Fujitsu. It has also been manufacturing VoIP phones for tier-one Japanese companies, such as Panasonic and Fujitsu.

ACT predicts the VoIP market in 2004 to remain at the same level as last year's. However, the company expects the market to grow in 2005. With the positive outlook, ACT predicts its total sales to reach 500,000 units in 2005. ACT's total sales value is forecast to reach US$27 million in 2005.

Manufacturing capability
Currently, ACT's VoIP production is subcontracted to Forward Electronics, a 1,800-employee-strong EMS manufacturer with factories in Taipei and Kaohsiung in Taiwan, and in Dongguan and Suzhou in mainland China. Production is conducted in Forward Electronics' San-Shia factory in Taipei. There are plans to move operations to Dongguan if the Taipei facility can no longer meet the increasing orders and if the need arises to bring down costs. However, ODM production for ACT's top Japanese customers will remain in Taiwan due to buyer preference. Once demand picks up in 2005, ACT plans to invest in an SMT line dedicated to the manufacture of VoIP products.

ACT has QC and QA engineers stationed in Taiwan and mainland China. These engineers use several types of testing equipment, including various Agilent instant simulators and several voice-quality testers, to evaluate DTMA and tone loudness. Several network and spectrum analyzers are also used for QC.

Between 200 and 300 units of VoIP products undergo random QC checks and interoperability testing for network and telecom issues. ACT designs its own evaluation parameters and procedures. New products go through about seven days of quality testing before they are released to the market.

Product development
ACT has about 90 R&D employees, 40 of whom are engineers with experience in VoIP product development. The company also has about 20 field application engineers and QC engineers who help buyers develop solutions and maintain quality. More software engineers will be employed to help ACT's customers develop applications and solutions.

ACT started developing proprietary VoIP products and technology in 1999. It launched H.323-compliant VoIP phones in the same year. It began production of MGCP gateways in 2002. Seeing that SIP is emerging as a more popular standard, most of the company's new products are now SIP-compliant.

Sample of product gallery

VoIP gateways Company:ACT Model name/number:G11441FS Unit FOB price (US$):150-160 Supported Protocols:NAT, PPPoE, SIP, TCP/IP

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