LAN card & adapter industry yields to embedded, wireless trends

	The model Gem-8139D network PCI card from Full River supports 10/100Mbps in half- and full-duplex modes. It is compatible with 802.3 10BaseT, 802.3u 100BaseTX and 802.3x full-duplex fl ow.

Wired products constitute a minority option to increasingly adopted wireless technologies.

Faced with a rapidly changing networking environment, the wired LAN card and adapter industry in China continues to decline. Makers have been migrating to other products such as routers and switches since 2007, reducing the supplier pool drastically from 100 to about 25 at present. The remaining companies, however, have shifted focus to wireless versions, driven by a fast-growing WLAN market worldwide. Wi-Fi has been instrumental to this trend because of the ease of deployment in both consumer and enterprise setups.

An additional challenge is the adoption of motherboards with embedded LAN chips and the influx of laptops with built-in WLAN. In recent years, these have entered the mainstream, hurting wired products further. Local suppliers forecast corded LAN cards and adapters will exit the market in the near future. The line’s share of the overall output is currently less than 20 percent.

Generally, both wired and wireless versions of these devices constitute a secondary business for China makers. They account for about 10 percent of sales at Haoliyuan (Shenzhen) Electronic Co. Ltd and Shenzhen Tenda Technology Co. Ltd. It is roughly 20 percent for Full River (Hong Kong) Ltd and Winstars Technology Ltd. Like their peers that abandoned the line, the suppliers provide other networking equipment such as switches, routers, access points and modems.

China’s selection of LAN cards includes mainly wired PCI and WLAN models, with the latter representing more than 60 percent of aggregate yield. PCMCIA versions have been withdrawn from the market.

The corded segment consists mostly of 10/100Mbps Fast and 10/100/1,000Mbps Gigabit Ethernet varieties. The second type has been gaining steam. Shenzhen Tenda forecasts such units will account for 40 percent of production in coming months.

Prices range from $3 to $4 for 10/100Mbps variants, and $4 to $6 for 10/100/1,000Mbps versions. Quotes are projected to decrease further by 5 percent at most this year.

Wired adapters comply with 802.3 10BaseT, 802.3u 100BaseTX, 802.3ab 1,000BaseT, 802.1p and 802.1q standards. These integrate ACPI advanced power management function. The products have a 32-bit 33/66MHz PCI interface and are compatible with PCI 2.1 and 2.2 specifications. The transmission speed ranges from 10Mbps to 1Gbps.

The supplier pool in China is expected to remain stable this year despite narrowing profit margins and intense competition.

Makers are mainly based in Guangdong province, with the most number operating in Shenzhen. The city accounts for about 80 percent of China’s overall output. Key players based there include major enterprises such as Proware Technologies Co. Ltd and Shenzhen Tenda.

Other manufacturers are in Jiangsu and Zhejiang provinces. A few have moved factories inland for cost considerations, enabling them to offer more competitive prices. Full River is one, having transferred its facility to Hunan province, while maintaining headquarters and R&D and marketing departments in Shenzhen. The company said the interior area has about 5 percent lower labor and rent outlay than coastal locations.

Small operations can produce fewer than 50,000 LAN cards and adapters each month, while midsize and large enterprises can turn out 100,000 to 2 million units. Full River averages 400,000 units monthly from a 2 million capacity. Shenzhen Tenda can manufacture 500,000 each month but yields 450,000.

Mold tooling and plastic injection molding are subcontracted. Small companies handle assembly, testing and packaging in-house. The rest conducts SMT as well.

About 80 percent of output is exported, mainly to North America, Europe, Asia and the Middle East. Wired models target emerging markets in the last three regions. OEM and ODM orders form the bulk of outbound deliveries.

Full River’s entire production is shipped to Europe and North America under an OEM/ODM arrangement. Shenzhen Tenda, on the other hand, concentrates on the domestic market, sending only about 30 percent overseas. Seventy-five percent of exports go to Europe and North America.

Although LAN cards remain available in Taiwan, only fewer than five suppliers are producing them as focus has shifted to WLAN models. But even with this move, the entire category has been reduced to a minor industry because of the prevalence of motherboards with embedded LAN modules. To keep the mature line buoyant, companies emphasize high-power value-added devices. Such Wi-Fi units can support 500m to 1km transmission distance compared with mainstream 100 to 200m. They can also penetrate through walls and other obstacles.

Suppliers in the island usually outsource antennas. Only a few can produce this in-house, translating to additional advantage in controlling costs and ensuring quality. Such players include Argtek Communication Inc. and Tekfun Co. Ltd, which employ R&D personnel with expertise in RF design and analog tuning.

Based on the protocols supported, WLAN cards from Taiwan come in 802.11a, 802.11b/g, 802.11a/b/g and 802.11n variants. The last type is projected to dominate 2H10 shipments and take the mainstream position from 802.11b/g units, thanks to widening adoption in notebook and netbook computers. The 802.11n products support MIMO technology with 1T2R, 2T2R, 2T3R and 3T3R. These have PCMCIA, PCI or PCI Express interfaces or USB adapters.