0. Outlook of Taiwan’s Communication Industry Present to: the 10th ATIE
April 07, 2005
Sean Wang, General Director
Industrial Economics Knowledge Center (IEK)
Industrial Technology Research Institute (ITRI)

1. Outline Current Status Current Status
Telecomm Service
Telecomm Equipment
Current Status
Telecomm Service
Telecomm Equipment
Worldwide Position and Opportunities
Promotion Perspective

2. Focus Industries of Taiwan
2004 Revenue
(US$Bn)
12.0
Telecomm
Broadband Networking:
Optical communication industry, LAN products, broadband access equipment and IP applications.
Wireless Communications:
End user equipment, WLAN, WMAN, Personal Area Network, Data transmission devices
67.2 IT
IT Hardware
Network & Communications
Software Industry
32.9 IC
IC: IC design, manufacture, assembly and testing
IC related applications: memory, logic components, system chips, communication, display, multimedia and IA.
21.3
FPD
Panel : PDP, TFT LCD, TN/STN, OLED
Key Component: Glass, Color Filter, Backlight, Driver IC, Polarizer
Source：IEK/ITRI (2005/04)

3. Evolution of Telecomm Service In Taiwan3G
Release of
Fixed-network telecomm service
Leased-circuit service
-Local long-distance land cable
-International submarine cable
Release
of ISR
Mobile Virtual Network Operator (MVNO)
After 2000: completing liberalization, broadband infrastructure
Reform of the Directorate General of Telecommunications
Release of
Trunked radio service (’97)
Radio paging service (’97)
Cellular mobile service (’97)
Mobile data communication service (’97)
Low-powered cordless phone (1900MHz) (’99)
Release
of CT-2
Chunghwa Telecom Co.
established
: on-going liberalization
Terminal equipment liberalization
Telecom network
usage liberalization
Before 1990: government monopoly
1987
1989
1994
1996
2000
2002
2004
1998
Source：IEK/ITRI (2005/04)

4. Evolution of Telecomm Equipment Sector in Taiwan
Main Products
+ Ethernet
BB Access Equip.
Mobile Phone
Telephone Set
+ Analog
Modem
+Ethernet
1960
1970
1980
1990
2000
Development Stage WW
Supplier
Investing
in R&D
Relying
on Import
Source：IEK/ITRI (2005/04)

5. Telecomm Industry of Taiwan: Structure
Telecomm Equipment
RF IC
Design
Mediatek 、VIA 、Yuantonix、RALINK、ITRI/CCL/STC …
Baseband IC
Cellular Phone
BENQ、
DBTEL、
QUANTA COMPUTER、
LITEON、
ARIMA、
COMPAL、 …
Epitaxial
Wafer
VPEC、GETC、
Feedback
…..
Foundry
(GaAs，Silicon)
WIN、
AWSC、
GCT、
UMC、
TSMC、 …
Packaging
USI、
THEIL
…..
Testing
KYEC …
Wireless LAN
GEMTEK、
ZCOM、
ACCTON、
USI、
ASKEY …
Source：IEK/ITRI (2005/04)

6. Telecomm Industry of Taiwan: 2004 Results
Long-Distance
Phone 3.9%
International
Phone 7.5%
56.5%
11.9%
6.7%
Mobile Phone
Local Phone
Others
Internet & Data 13.6%
Telecomm Service
2000
2001
2002
2003
Revenue, US$ Bn 4 8 12
2004
12.0
11.0
Service
Equipment
Telecomm Equipment
LAN 28.2%
CPE 57.5%
Transmission &
Switching 3%
Broadband
Access 11.3%
Source：IEK/ITRI (2005/04)

7. Trend Analysis of Major Telecomm Service in Taiwan35
Mobile phone penetration rate > 100% since 2002
Mobile Phone 30 0%
20%
40%
60%
80%
100%
120% 25
Fixed Line
No. of Subscribers
(million) 20
Penetration Rate
Internet 15
Broadband
Quick adoption of broadband since 2000 10 5
1997
1998
1999
2000
2001
2002
2003
2004
Source：IEK/ITRI (2005/04)

8. Revenue Share of Telecomm Services in Taiwan
9.6
9.3
9.6
10.2
11.0
Revenue: US$ Bn
100%
Others
9.6%
11.8%
12.2%
13.6%
Internet and other
value-added services
80%
51.9%
54.3%
53.9%
54.2%
56.5%
Mobile phone service
60%
40%
10.2%
7.4%
9.2%
7.4%
7.7%
5.9%
International telephone service
4.8%
4.2%
7.5%
20%
3.9%
Long-distance telephone service
6.7%
6.7%
Leased-circuit service
24.5%
21.9%
20.3%
13.4%
11.9%
Local telephone service 0%
2000
2001
2002
2003
2004
Mobile phone service has been the main revenue source
Source：DGT ; IEK/ITRI (2005/04)

9. Telecomm Industry of Taiwan: Equipment Sector
WW Ranking 17 15 13
Focus Products
Wireless:
Cellular phone, WLAN, Bluetooth, GPS
Wireline:
xDSL, LAN Switch, SOHO Router
Cable Modem, VoIP,
Optical Communication 25
Projection 20
Wireless 15
Wireline
Revenue, US$ Bn
19.4 10
14.7
7.7 5
4.3
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2005 growth rate is estimated at 22.5% for all telecom equipment
2005 growth rate is estimated at 23.4% for wireless equipment
Source：IEK/ITRI (2005/04)

10. Ranking of Taiwan’s Top 10 Telecomm Products
Revenue
(US$Bn)
Growth
Revenue Share
Ranking
2004
2003
2004/2003
2004
2003
2004
2003
Cellular Phone
3.99
3.13
27%
33%
35% 1 1
WLAN
1.54
1.46 5%
13%
16% 2 2
SOHO Router
0.99
0.77
29% 8% 9% 3 3
xDSL CPE
0.98
0.67 5% 8% 7% 4 5
GPS
0.92
0.69
46% 8% 8% 5 4
Ethernet Switch
0.72
0.60
20% 6% 6% 6 6
Bluetooth
0.44
0.17
159% 4% 2% 7 9
Cable CPE
0.37
0.29
28% 3% 3% 8 7
IP Phone
0.24
0.15
60% 2% 2% 9 10
Analog Modem
0.21
0.27
-22% 2% 3% 10 8
Others
1.58
0.85
86%
13% 9%
TOTAL
11.98
9.05
32%
100%
100%
*Including both domestic and overseas production revenue
Source：IEK/ITRI (2005/04)

11. Outline Current Status Worldwide Position and Opportunities
Telecomm Service
Telecomm Equipment
Worldwide Position and Opportunities
Promotion Perspective

12. Worldwide Ranking of Taiwan’s Products
WW Ranking*
Top 1
Top 2
Top 3
Telecomm
Wireless LAN
ADSL Modem/Cable Modem/Analog Modem
NIC
Hub
SOHO Router
Lan Switch
Opto-Electronics
CD-R Disk
CD-RW Drive/Disk
DVD-R Disk
DVD RW Disk
Large Scale TFT-LCD Module
S&M Scale TFT-LCD Module
LED
DSC
CD-ROM Drive/DVD-ROM Drive/DVD-W Drive/DVD RW Disk
TN/STN LCD Module
PDP
FPD
LCD Monitor
Notebook PC
Mother Board IC
IC Manufacturing
IC Packaging
Mask ROM
IC Design
DRAM
*Worldwide ranking by 2004 revenue
Source：IEK/ITRI(2005/04)

13. Communication Network Plays An Important Role
Sharing
Interoperability
KID’S
BEDROOM
MASTER BEDROOM
Wireless：Cellular、IEEE 802.1x、Bluetooth 、UWB、Zigbee、RFID
Interface：IEEE 1394、USB、DVI、HDMI
Wireline：Power Line、Phone Line、Ethernet
STUDY
KITCHEN
LIVING ROOM
Source：IEK/ITRI (2005/04)

14. Opportunity for Worldwide Telecomm Equipment Suppliers
Video Streaming
Handset
Mobile Terminal
Handset
Data Handset
Smartphone
Tone Phone
Digital Phone
VoIP
Phone
Video Streaming
Phone
Wireline Terminal
Screen Video Phone
Home Networking (WLAN)
Residential Gateway
Modem
BB Modem
BB Router
Access
FTTC/B
FTTH
Metro Access
Sonet/SDH
Metro Ethernet
Backbone
Sonet/SDH
DWDM
Opportunities:
Mobile Terminal for handset: Smartphone & Video Streaming Handset
Networking: xDSL、IP DSLAM、Switch、VoIP CPE 、 Optical Transceiver 、Home Gateway、Home Networking
Transmission: FTTx 、Metro Ethernet
No for backbone
NGN: B3G，iB3G；Integration of Cellular Phone & WLAN
Source：IEK/ITRI (2005/04)

15. Outline Current Status Worldwide Position and Opportunities
Telecomm Service
Telecomm Equipment
Worldwide Position and Opportunities
Promotion Perspective

16. Telecomm Industrial Development Environment in Taiwan
R&D and
Innovation System
Resources
Integration
High Value-Added
Manufacturing Center
Financial
Support
Warehousing and
Distribution Center
Resources for Production
Technology
Manpower
Capital
Competitive Investment Incentives
Tax Benefit
Subsidization
Regulatory Framework
Company Operation Related Laws & Regulations
Environmental Protection Related Laws & Regulations
Source：IEK/ITRI (2005/04)

17. Telecomm Industrial Development Emphasis in Taiwan
Industry Testing Capability
1. Promote Wi-Fi set up second testing laboratory
2. Improve testing services and environment
Promote IPO*
1. Expand from purchasing key component to major
system device products
International Collaboration
1. Push for international cooperation
2. Promote establishment of R&D center
Industry Practical Platform
1. OMIA
2. Telecomm Industry alliance
Telecomm Industry Investment
1. Establish research and development center
2. Develop new products
3. Set up new companies
4. investment in company’s facilities
Key Product Development
1. WLAN/cell phone/IP telecom/FTTx/EFM/duo network（include home network & VoIP）
*IPO: International Purchasing Offices
Source：IEK/ITRI (2005/04)

18. Comm. Infra + App. Development
M-Taiwan
Zoo
Touring
Transportation
Mobile
Life
Diet
Traveling
Government
Harbor
Mobile Service
Medical
Warehouse
Cellular
WLAN
Networking
Comm. Infra + App. Development
Exhibition
Museum
School
Library
Mobile Learning
Create new applications, from network infrastructure construction
Consumer Device
NIC/Handset
Network
Router/AP SI
Networking
Service
Content
Application
Source：IEK/ITRI (2005/04)

19. (((
)))
Thank You!
謝謝!