Taiwan's Korenix has released the 5010G, an industrial 10-port managed Gigabit Ethernet switch with seven 10/100Mbps and three Gigabit RJ-45/SFP combination ports.

Emphasis on flexibility, scalability and upgradeability is shifting the Ethernet switch market to the high end, particularly in Taiwan where most makers are looking to penetrate the upmarket. This move is resulting in Gigabit Ethernet switches with 10Gbps uplink support in preparation for an eventual step up to 10 Gigabit Ethernet-mixed fiber-optic and Gigabit Ethernet switches, and managed models with SFP fiber slots for single- or multiple-mode fiber modules.

More makers are concentrating on developing Gigabit Ethernet switches to support demand for faster speed and higher bandwidth in line with the growing market for triple play and IPTV.

Although it will be several years before the market switches to 10 Gigabit Ethernet, some makers are preparing for this change with models that support 10 Gigabit uplink. Most companies do not plan to develop 10 Gigabit Ethernet switches in the near term.

Supply in Taiwan and mainland China comprises entry-level, midrange and high-end switches that can be used in commercial and industrial applications. Makers of industrial switches in Taiwan tend to specialize, due in part to the high technical expertise required in developing and servicing industrial Ethernet switches.

Manufacturers of commercial Ethernet switches carry a broad range of related peripherals, such as adapters and converters, modems and wireless communication appliances. For a growing number of companies, entry-level switches are meant to complete their product range or act as service products.

Mainland China suppliers, which currently number 10, generally focus on low-end products. Although makers optimize the country's strong supply support chain, companies face component shortage and limited demand. Nonetheless, makers remain optimistic that exports will continue to climb during the year.

Taiwan has five manufacturers of industrial switches and 15 to 20 makers of commercial Ethernet switches. Competition from mainland China makers and slipping margins have shrunk the supplier base in Taiwan.

The commercial market is largely affected by the competition, but the industrial sector continues to enjoy strong sales and margins.

Industrial Ethernet companies expect to sustain the robust growth of more than 50 percent it enjoyed in the last two years for the next three years.

In Taiwan, the total sales of switches and hubs is projected to increase by 1 percent to reach $1.09 billion in 2007, up from $1.06 billion in 2006, according to the Industrial Economics & Knowledge Center (IEK).

However, production volume is expected to slide from 160.4 million ports to 158.8 million ports due to the shift to small-volume, high-value switches.

Taiwan makers forecast a 3 percent to 8 percent decrease in prices of industrial switches. A more dramatic drop of up to 40 percent is predicted for commercial switches. Mainland China makers predict stable prices for switches in 2007.

Taiwan moving to the high end
Stepping up to Gigabit Ethernet
10 Gigabit Ethernet switches breaching surface
Mainland China caters to the low-end market
Declining prices
Boosting production and exports

	The HMG-623 from Taiwan's Ethernet Direct is an industrial SNMP managed 6-port Ethernet switch plus 2-port Gigabit copper-based mini GBIC managed switch.

These products include 10 Gigabit Ethernet switches, mixed fiber-optic and Gigabit Ethernet switches, and managed Gigabit Ethernet switches. Managed Gigabit Ethernet switches have SFP fiber slots that accommodate single- or multiple mode fiber modules to allow easier customization for the targeted application.

CirRich Technology Corp. stopped designing entry-level switches to focus on high-end models. In 2006, the company dissolved its manufacturing operations and subcontracted production to joint-venture factories in mainland China and Taiwan.

The shift allowed the company to focus on what is considered as the more important parts of operation: design and development, and cost cutting.

At present, CirRich makes only midrange and high-end switches that equally account for half of the product series consisting of about 12 models. The manufacturer only offers entry-level models made by other companies as service products.

Due to this switch, CirRich expects sales to increase by 60 percent to 70 percent this year. The company markets about 3,000 units of entry-level switches and 500 to 1,000 units of midrange and high-end switches every month.

Ninety percent of the company's output is exported, mainly to Europe.

Ethernet Direct Corp. focuses on high-end switches. Entry-level products are offered as service products designed to complete the selection.

The company also makes commercial Ethernet switches, but only on an OEM basis. Eighty percent of its output carries the Ethernet Direct brand, and all output is exported.

Products meet CE, FCC and UL standards. The company is trying to obtain special approvals, such as the DNV for marine products, as it prepares to venture into niche markets like the marine industry.

Ethernet switches account for more than 80 percent of Ethernet Direct's total output, which also includes industrial modems and data acquisition modules. The company conducts all major business operations in-house, including design, manufacturing, sales and marketing, and technical support.

About 65 percent of Ethernet Direct's 80 models of Ethernet switches are high-end industrial Ethernet switches; 25 percent are entry-level; and the rest are midrange products. The range covers entry-level 5-port to managed 10-port switches.

The company plans to release managed 16-port switches in the coming months.

Accton Technology Corp., which is among Taiwan's top three makers of Ethernet switches, markets Ethernet switches and related products through a new business unit called Edge Core Technology.

The unit remainsan integrated part of Accton, but focuses on in-house-branded products. Accton itself specializes in OEM and ODM projects.

Edge Core carries a full range of Ethernet switches, including high-end switches that account for half of the total output. Midrange switches cover 30 percent, and entry-level switches cover 20 percent.

The selection of more than 30 managed models accounts for 90 percent of Edge Core's product line, which also includes Ethernet and communication peripherals.

Production of Accton's Ethernet switches is done in mainland China. Only a few, high-end models such as 10 Gigabit Ethernet switches are produced at the company's factory in Taipei.

Accton is deemphasizing entry-level products and expects its total production volume will decrease in 2007. However, the shift to high-end switches is projected to push sales
up by 15 percent.

Exports account for 95 percent of Accton's output. Industrial Ethernet switch manufacturer Korenix Technology Co. Ltd carries about 40 models of industrial Ethernet switches. These consist of about 20 entry-level, 10 midrange and 10 high-end units.

The company plans to increase the output of high-end switches by 50 percent this year. It regards the high-end line as being more competitive with the strong market performance of power-over-Ethernet products. Korenix expects sales to double this year. It currently markets between 3,000 and 5,000 units a month, and about 80 percent are switches.

Other products include Ethernet converters and device servers, as well as wireless appliances.

Korenix has an R&D team of more than 20 engineers. Production is subcontracted, as the company focuses on R&D and QC.

This ISO 9001:2001-registered manufacturer exports 80 percent of its output to Europe, mainland China and North America.

	Taiwan's Ethernet Direct has released the HME-800, an industrial SNMP managed Fast Ethernet switch with eight 10/100Mbps TX ports, and VLAN and IP security functions.

R&D efforts in both the industrial and commercial Ethernet switch sectors are focused on Gigabit Ethernet. Taiwan's Accton said that Gigabit Ethernet is becoming mainstream with adoption growing due to the popularity of triple play, IPTV and other high-bandwidth applications. Price reductions in the Gigabit market have also made products more affordable.

Targeting the midrange commercial market, CirRich is currently promoting the Web-Smart Gigabit Ethernet switches, and mixed Gigabit Ethernet and fiber-optic switches.

The manufacturer's latest model, the S9224F mixed switch, is a 24-port fast fiber-optic switch with two optional Gigabit Ethernet slots. The L2+ switch is designed for collapsed backbone solutions for small and medium-sized businesses. CirRich will release high-end managed Gigabit Ethernet switches in 2008, by which time it expects high-end models to become more affordable and marketable.

Industrial Ethernet switch makers are promoting high-end managed switches for demanding applications. Makers are establishing a niche in the high-end managed market where the competition is less intense.

Ethernet Direct emphasizes flexibility and scalability in its latest industrial managed Gigabit switch with optional SFP. The HMG-828 supports both Gigabit SX and LX, and the flexible SFP form factor that accommodates different fiber modules—multiple modes or single mode—to provide the flexibility and scalability needed for different applications. Ethernet Direct provides a 24hr technical support worldwide through an online Webinar, a Web-based seminar where customers can obtain realtime support and information.

The Webinar is currently operating from 16 branch offices worldwide and is being expanded to cover 20 countries by the end of this year. Membership to the Webinar is free and open. The company partially assembles its switches in its factory in Dongguan, Guangdong, and in its factory in Taipei. It has a total workforce of 200, including 33 R&D engineers. The team can develop an unmanaged system in three months and a managed system in six months.

	The LS5508 is a L2/4 10 Gigabit Ethernet standalone switch from Taiwan's Accton featuring eight XFP ports with support for SR, LR and ER optics and 160Gbps switching capability.

Taiwan's Accton is the only company interviewed for this report that is already marketing 10 Gigabit Ethernet switches. The line, which includes mixed models with 10Gbps uplink, generates 5 percent of the company's Ethernet switch sales. Thanks to triple-play applications and IPTV, the company's 10 Gigabit Ethernet switch sales picked up in 2006, a year after its release.

Accton will release five more Gigabit Ethernet switches this year in addition to its existing 10 models. L2, L3 and L4 Gigabit Ethernet switches now account for about 50 percent of the company's total output. All new models will support 10 Gigabit uplink in preparation for upgrades to 10 Gigabit Ethernet. The company offers only one 10 Gigabit Ethernet model developed two years ago. As infrastructure for 10 Gigabit Ethernet has yet to be established, the company will instead develop transition products such as Gigabit Ethernet switches with 10Gbps uplink support.

Accton is not expecting a significant increase in volume in the next three quarters given the current state of the networking infrastructure and high prices. However, because 10 Gigabit Ethernet switches offer the best solution for speed and reliability in core and backbone systems, the company is certain of growth in the near future. The limited supply is also seen to keep margins in better shape.

Korenix has moved its entry into the 10 Gigabit Ethernet switch to late next year. The company said that with the industrial market emphasizing reliability more than speed, Gigabit Ethernet is currently quite sufficient.

According to Ethernet Direct, 10 Gigabit Ethernet switches may not be suitable for the industrial Ethernet market for another two to three years because the networking infrastructure in industrial settings is way behind that of the commercial market.

The lack of support infrastructure and the high prices could delay the full take off of 10 Gigabit Ethernet switches. These switches are currently priced 10 times more than Gigabit Ethernet switches.

However, Taiwan's CirRich noted declining prices for 10 Gigabit Ethernet products.

Nevertheless, CirRich does not plan to pursue the line in the near term.

	Mainland China's B-Link offers the BL-S508 switch, which has 10/100Mbps auto-negotiation RJ-45 ports that support auto MDI/MDIX.

Mainland China makers mostly focus on low-end to midrange networking products, although a few also provide 10 Gigabit Ethernet switches. These makers not only specialize in various networking products, but are also engaged in the development of electronic devices.

Manufacturers direct their product development efforts toward improving external design and expanding functions.

B-Link Electronic Ltd's networking products cover modem cards, LAN cards, sound cards, and 4-port and 8-port routers. The company also makes digital products, including USB flash disks, USB cards, USB Bluetooth dongles, USB hubs, USB light, USB cleaners, and FireWire cards and card readers. It takes two months to release a new low-end switch and five months to release new high-end units for the company.

Shenzhen Fiberscape Technology Co. Ltd has released Fast Ethernet switches. It cooperates with technology partners in France in developing Wi-Fi and EPON products, POE switches, SFP transceivers and CATV modules. Fiberscape's R&D team develops new switches every three months.

Full River (Hong Kong) Ltd has been producing switches since its establishment in 2000. At present, switches account for 30 percent of the company's total output. In 2006,40 percent of its total sales was generated from switches.

Full River also offers network adapters, PCI to PCIMCIA adapters, PCI sound cards and DSL routers. It requires three months to finish a new product. In 2007, the company plans to develop 10 Gigabit Ethernet switches.

	The SG9224F from Taiwan's CirRich is a 24-port L2 switch with optional 2-port Gigabit slots and fast fiber optics. It supports IP routing, full VLAN and IP multicast.

Entry-level Gigabit Ethernet switches with eight ports are quoted at $50 each. Midrange unmanaged models with 15 to 24 ports are priced from $180 to $300 each. High-end unmanaged switches list at $300 to $500 each.

High-end managed Gigabit Ethernet switches could range from $350 to more than $2,000 each due to the wide difference in management features that these products offer.

CirRich predicts prices of Gigabit Ethernet switches will have 30 percent to 40 percent slide by end of 2007 due to increase in demand and supply, along with the cost decline of chipsets and IC solutions. The cost of Gigabit Ethernet per port could drop from the current price of $3 to $4 to $1.50 to $2 when more IC companies join the market. The chipset accounts for 30 percent to 40 percent of product cost.

	The 1000M switch from mainland China’s Full River is an 8-port Web smart switch with eight 10/100/1000Mbps auto-negotiation RJ-45 ports supporing auto MDI/MDIX.

No more than five Ethernet switch companies in mainland China are able to carry out large-scale manufacturing. Many companies, however, are planning to expand their production and exports. The majority of mainland China companies are export-oriented. Most makers are based in Guangdong, particularly in Shenzhen and other areas in the Pearl River Delta. They take advantage of Shenzhen's easy access to component supply, which allows many of them to cut down on cost and improve time to market.

Shenzhen's strategic location and large seaport allows makers to import other components abroad.

B-Link Electronic, which began manufacturing switches in 1997, experienced a 20 percent increase in 2006 sales over 2005. The company expects sales will further grow by another 20 percent—or higher—in 2007.

B-Link Electronic owns a 5,000sqm factory and employs 600 workers. The factory has ISO 9001:2000 registration and complies with RoHS. Except for mold making, the company performs all production processes in-house.

About 95 percent of B-Link Electronic's output is shipped to the Middle East, Europe and the United States. OEM accounts for 70 percent of the exported products. Own-brand and ODM account for the remaining 30 percent.

Full River increased its monthly capacity in 2006 by 30 percent to exceed 300,000 units. This figure is estimated to remain steady in 2007.

Ninety-five percent of Full River's output is exported, of which 80 percent is for OEM.

The company ships its products to Europe, North America, the Middle East and Asia. The majority of exported products are 5- and 24-port switches that are priced from $5 to $40.

Full River has two ISO 9001:2000-registered factories that span 10,000sqm. The company has 500 employees, including an 80-member QC team.

The company conducts all manufacturing processes in-house. All products passed RoHS standards.

Established in 2000, Megastek is engaged in OEM and ODM business. The company exports all its switches to the United States, Europe and Southeast Asia. Megastek also produces ADSL modems and wireless routers. It has its headquarters in Futian district in Shenzhen, Guangdong province. It maintains an ISO 9001:2000-registered factory spanning 2,400sqm.

Fiberscape began production of switches in 2001 and can make 1,000 switches a month. On average, the company produces 850 switches monthly. At present, switches account for 65 percent of its total output. The company owns two factories spanning 2,000sqm and employing 220 workers. Fiberscape has four QC specialists that handle product inspection and testing.

About 80 percent of Fiberscape's switches are shipped to Europe, the United States and Asia, and carry Fiberscape's own brand. The company targets the high-end market. In 2006, Fiberscape exported 3,000 switches out of its 5,000-unit output. The company generated $6.46 million in total sales in 2006, of which $3.88 million came from exports of switches.