February. 5, 2002

The Market Intelligence Center (MIC) of the government-backed Institute for Information Industry (III) forecasts Taiwan's optical-communications industry will begin to take off in 2003 after rising at a lower-than-expected growth rate of 7.5 percent in 2001, due mainly to a weak global market. The center predicted the take-off to start in 2003 as it estimates that the global industry will have recovered by then.

MIC points out that compared with the declining European and North American industries, Taiwan's optical-communications industry still recorded an acceptable 7.5% growth last year, tracing this relative success mainly to the enthusiastic involvement on the production by domestic manufacturers regardless of overcrowded markets.

Passive and active electronic components were estimated to account for a combined 60 percent of Taiwan industry's value last year. In its analysis, MIC points out that the active component segment is expected to lose steam soon after the upturn, while the passive sector will not change much from last year, except of the popular dense wave division multiplexing (DWDM) and thin film filter (TFF) items, which are forecast to have a more serious impact than other items.

MIC estimates the ongoing business downturn will last one more year and will not recover until 2003. The reason given is that the spending by manufacturers in the USA, the world's largest market for these products, will keep shrinking this year. According to market researcher Optical Oracle of the U.S, the 11 leading North American telecom providers plan to cut back spending by 35% this year and 10% annually after 2003.