Market Trends of Taiwan Data Center Networking Industry
IT & Telecommunication Segment Holds the Major Share.
- Cloud and telecom are anticipated to contribute the largest market shares among end-user industries. Due to the increasing data generation, which drives the demand for quicker processing and effective servers, the cloud segment generates significant revenue. Numerous cloud service providers, including Cadence, Google, Siemens, Azure, AWS, and Synopsys, joined forces with TSMC to form a cloud alliance. Other big corporations also intend to enter the Taiwanese cloud industry in the future.
- As Taiwan develops into a regional hub for many enterprises, they are investing in cloud computing, thus increasing the demand for local data centers. The government is encouraging Taiwanese businesses to go digital. It is also dedicated to creating a cloud-based smart digital blueprint for local partners and connecting top-tier creative technologies for a variety of industries.
- For instance, Microsoft launched its "Reimagine Taiwan" program in 2020, outlining intentions to build its first cloud data center area in Taiwan and make large investments in local talent and development with the aim of supplying over 200,000 Taiwanese with digital skills by 2024.
- With an increase in smartphone users in Taiwan, the demand for telecom services is expected to grow. The Taiwanese electronics market has expanded due to the growing semiconductor sector. Taiwan currently produces close to 21% of the world's semiconductors. Over the past few decades, Taiwan has dramatically improved its semiconductor output, becoming a prominent participant in the sector.
- The adoption of these 5G services is projected to be accelerated by the rising need for high-speed data access for cloud and IoT applications, such as smart home energy management. However, as 5G networks offer faster speeds, higher capacity, and lower latency than 4G LTE networks, the number of 5G subscribers is growing at a quicker rate. In Taiwan, the total number of 5G customers has surpassed 1 million in the five months after the introduction of the technology. By the end of 2023, Taiwan's mobile network operator, MNO Chunghwa Telecom, aims to increase its 5G penetration by around 10% points to around 35%.
- The use of digital consumer products such as smartphones and the data generated via them may allow telecom companies to securely manage and store large volumes of data and scale up the storage capacity as per their requirements. Such instances in the market create more demand for data centers, leading to rising requirements for network devices and services in the country.
Understand The Key Trends Shaping This Market
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Ethernet Switches Holds Largest Market Share
- Data Center Ethernet switches are network devices that operate in a data center environment. In order to facilitate the efficiency and rapid transfer of data, they play an essential role in establishing interconnection between servers, storage devices, or other network equipment at a data center. Switches are designed for high-speed data transmission with support for gigabit and multigigabit Ethernet, including 10 GbE, 25 GbE, 40 GbE, 100 GbE, and beyond.
- The increasing adoption of cloud service makes Ethernet switches indispensable for data centers hosting the cloud infrastructure. It allows the communication of servers and storage components to deliver cloud services as smoothly as possible.
- The use of Ethernet switches facilitates interconnections between different data centers. In particular, it is essential to promote business activity and collaboration in Taiwan, which has often served as a hub of connectivity for the region and worldwide.
- The increasing focus on digitalization, Internet penetration (the number of Internet users has reached 21.68 million users with 0.8% YoY in Taiwan as of January 2023.), and e-commerce sales across the country creates more need for storage facilities, resulting in huge demand for data centers and consequently the need for more ethernet switches within data centers.
- The key players in the market focus on updating the network devices to meet the market demand. In January 2023, in response to the growing demands of today's data center environment, Dell Inc. introduced Power switch S520ON 25 GbE fixed switches consisting of all Technologies' latest disaggregated hardware switching and networking solutions that provide state-of-the-art high-density 25 GbE ports and a wide range of functionality. These switches provide optimum flexibility and cost-effectiveness for web 2.0, cloud service providers, and enterprises with demanding compute and storage network traffic environments.
