Increasing competition from major US companies will not have a serious impact on local makers of computer networking products, according to market leader, Accton Technology. Both IBM and Intel have moved strongly into the market for networking chips during the past year. Intel recently paid more than US$2 billion for US-based network chip designer, Level One Communications, and earlier this week announced its intention to become a dominant force in the market. IBM made a similar statement last week.
Intel's relationship with local network products is complicated. The US company is both a supplier of chips that local companies use in their products, and a manufacturer of competing products. IBM's move will eventually put it in a similar position.
Accton uses chips made by Intel or its subsidiary, Level One, said Gavin Chou, the company's marketing manager. His company's revenues of US$200 million in 1998 make it Taiwan's largest networking product manufacturer. Products include network interface cards, network hubs, switches and routers. "We use Level One chips for some items, and for some high-end products we use the Intel RISC CPU," said Chou.
Accton had expected Intel to move more strongly into network technology, Chou said. But, "for Accton, for most of the Taiwanese networking companies, it will not have too much impact," he claimed.
"For some new products, most of the Taiwan vendors will use the chips from American companies like Intel, Galileo Technology, and so on," Chou said. However, he said, these cutting-edge products are usually made in small quantities. Only companies which rely on such products will be seriously affected by the new competition from Intel and IBM, Chou believes.
By the time products become mature, and begin to be made in large quantities, Chou continued, alternate suppliers of chips appear -- many of them in Taiwan. These high-volume products are the main source of income for most Taiwanese network companies.
Chou believes local companies should be more concerned about the integration of basic networking functions into the PC's main circuit board, the motherboard. "Of course there will be some impact when the network interface is put on the motherboard," said Chou, "but I would say that for us, the cash cow is not only the network interface card. We have a very good product mix."
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