WiMAX Industry:

Analysis & Investment

Opportunities

Department of Investment Services,

Ministry of Economic Affairs

Table of Contents
I.

Global Trends in WiMAX Industry Development ... 1

(I)
(II)

II.

Two Main Potential Markets ..................................................................1

Substantial Business Opportunities........................................................2

The Status of WiMAX Industry Development in

Taiwan ........................................................................... 4
(I)
(II)

Supply & Demand ..................................................................................4

An Analysis of Existing Gaps in the Industry Supply Chain, Investment
Niches, and Prospective Foreign Investors............................................5
(III) Major Suppliers in Taiwan .....................................................................8

III.
(I)
(II)

IV.

Optimum Investment Items for Foreign Investors 10

TaiwanBest Choice for WiMAX Investments..................................10
Investment Niche and Suitable Investment Categories........................12

Successful Examples of Cross-Border Strategic

Alliances and Foreign Investment in Taiwan .......... 14
(I)
(II)

Nortel Networks ...................................................................................14

Rohde & Schwarz.................................................................................15

V.

Industrial Investment Incentives ............................. 17

VI.

Industry-Academia Collaboration in Taiwan ......... 20

I. Global Trends in WiMAX Industry Development

WiMAX is a technology with the competitive advantages of high speed,
extensive coverage, low cost, and quick implementation. It is also considered
a prototype of 4G technology. In addition, with abundant opporunities in its
two main potential markets, WiMAX industry development and applications
have been receiving much attention from all sectors.

(I) Two Main Potential Markets

1.

Huge Development Potential in Developing Countries and Emerging

Markets
As the economic standards of emerging and developing economies

improves, many governments (e.g. India and China) have identified the
construction of a regional broadband network as a key develeopment project.
In view of this great advantage, WiMAX technology, with its wide coverage,
and wireless and quick connection services, will have a good chance of
winning over emerging and developing
2.

economies.

A Worldwide Trend for Wireless Cities

There is a growing trend around the globe, headed by developed areas

such as Europe, Japan, and the US, to create wireless cities. The main
driving force for this trend is the determination of national and local
governments to build wireless broadband networks that are available for use
anytime and anywhere, so as to enhance quality of life and business
efficiency, strengthen public security and emergency response, and reduce the
digital divide.
In the long run, WiMAX industry opportunities lie mainly with
emerging and developing economies, while developed countries and mature
markets can expect to benefit from the implementation of wireless cities.
Many other factors will also facilitate the rapid development of WiMAX
1

marketsIntels integration of WiMAX support in its notebook computers ;

investment in promising startups ; and the implementation of wireless cities
around the globe ; the active involvement of non-mobile service providers ;
and the strategic introduction of complementary products by leading
manufacturers, including Nokia, Motorola, Intel, Nortel, Samsung, etc.

(II) Substantial Business Opportunities

According to IDC research, total global investments in basic WiMAX
infrastructure will reach US$3.585 billion by 2011. And by that year, the
Topology Research Institute (TRI) predicts the WiMAX chips market will be
valued at US$1.105 billion, with a total of 41.1 billion users. The future holds
unforeseen business opportunties for WiMAX technology.
Investment Amount for Basic WiMAX Infrastructure Around the World 2006 ~ 2011
Unit: USD million

Source: IDC; compiled by TRI for the present study, 2007/07

With the exception of few countries, the Asia-Pacific region has a low
broadband internet penetration rate and lacks the relevant infrastructure.
2

Moreover, with a population of three billion (nearly half of the worlds

population), the Asia-Pacific is set to play a decisive role in global WiMAX
market development. IDC data indicate that the Asia-Pacific will have more
than a 50% share of global investment in basic WiMAX infrastructure by
2011.
Distribution of Global Investment in Basic WiMAX Infrastructure by 2011

Source: IDC; compiled by TRI for the present study, 2007/11

II. The Status of WiMAX Industry Development in

Taiwan
(I) Supply & Demand
When we classify communication products according to country of
manufacturer, Taiwans WLAN, xDSL CPE, SOHO Router, Ethernet LAN
Switch, and Cable CPE all rank among the worlds top three in their
respective categories in terms of gross domestic and overseas production. It is
obvious that Taiwan has enormous potential for Network Communication
CPE (customer-provided-equipment) production.

Note:

(a) The 2006 NTD:USD exchange rate was 32.5:1; (b) items are ranked according to global
market share, from largest to smallest.

Source: ITIS, 2007/03

With regards to WiMAX development,

CPE pricing exerts a great

influence on market growth. Encouragement from the Taiwanese government

and the efforts of major international manufacturers, in combination with
Taiwans network communication CPE manufacturing capabilities, should
speed up the reduction of WiMAX CPE prices and boost overall output.

According to data from the Institute for Information Industrys (III) Market
Intelligence Center (MIC), the annual output of Taiwans WiMAX industry
was expected to reach US$160 million in 2007, representing a year-on-year
growth of 604%. Taiwans producton of WiMAX equipment and facilities is
exected to reach US$4.28 billion by 2012 (approximately US$540 million for
base station facilities and US$3.74 billion for CPE).

(II) An Analysis of Existing Gaps in the Industry Supply Chain,

Investment Niches, and Prospective Foreign Investors
Implemented in 2005, the M-Taiwan Project (for the creation of a
mobile, or wireless, Taiwan) aims to transform the country from E-Taiwan
to M-Taiwan using WiMAX, and to boost industrial development through
application services.
M-Taiwan Project Milestones
Time

Events
Cooperation Memo signed between the Ministry of Economic Affairs and Intel

2003-2006

Taiwan WiMAX Development Blueprint Working Group established

WiMAX Fast Track Project, and M-Taiwan Project implemented

2007/03

Executive Yuan announced the liberalization of wireless broadband access operations

2007/04

The National Communications Commission (NCC) announced that it was accepting

applications for wireless broadband operators, and relevant application procedures.

2007/05

Technical Cooperation Memo signed between the MOEA and NEC, NORTELL, R&S, and
other major international WiMAX manufactures.
The NCC announced the six winning bids for wireless broadband operators. These include

2007/07

Global Mobile Corp., VMAX Telecom, and First International Telecom in northern Taiwan;
and Far Eastone Telecommunications Co., Tatung Infocomm, and Vastar Cable System Co.
in southern Taiwan.
Technical Cooperation Memo signed between the MOEA and Alcatel-Lucent, Motorola,

2007/10

Nokia Siemens Networks, Sprint-Nextel, Starent, and other major international WiMAX
manufacturer.

2007/10

The WiMAX Forum set up, its first global mobile WiMAX accreditation laboratory in
Taiwan.

2008~

Second global mobile WiMAX accreditation laboratory set up in Taiwan

WiMAX service launched.

Source: Compiled for the present study, 2007/12

To speed up WiMAX development, the Taiwanese government has

initiated the M-Taiwan Project, aimed at helping Taiwanese manufacturers
enter the international WiMAX market at the earliest opportunity. It is
estimated that the government will invest a total of US$1.138 billion in the
M-Taiwan Project, of which US$923 billion will be invested in the basic
WiMAX infrastructure. It is predicted that the WiMAX industry will attract
US$2.462 billion in private investment, and successfully establish an industry
chain for upstream and downstream products including chips, terminal
devices, base stations, and application services. The remaining US$215
million will be used to promote M-Taiwan application services.
M-Taiwan Application Services Promotion Program

Source: Mobile Taiwan Applications Promotion Program Office; compiled for the present study,
2007/12

Through the WiMAX Acceleration Project and M-Taiwan Project,

the Taiwanese government hopes to facilitate WiMAX industry development
and build a complete WiMAX industry chain in which different sectors of the
business (e.g. hardware terminal, manufacturing, software integration,
operation) can work closely together. In this case, terminal device and
equipment manufacturers will be able to incorporate future service
requirements early on, during specifications development, and operators can
then expedite the planning of an effective business operation model.
With regard to the current development of the WiMAX industry chain,
CPE devices are the first and foremost WiMAX products being developed by
Taiwanese manufacturers, whereas there are few developers of chips, ASN
Gateway products, core network systems integration, and testing facilities.
The main reason for this is that Taiwanese companies are mostly focused on
the manufacturing of terminal devices for 3G technologies, making upstream
chip R&D capability a weak point for the industry. However, as Taiwan is a
pioneer of global WiMAX distribution, the construction of an industry chain
seems to be more important. Foreign chip manufacturers, such as PicoChip,
Runcom, Sequans, Beceem, and Wavesat, are all potential targets for
techological collaboration. In addition, potential foreign manufacturers like
ASN Gateway, system integration manufactuers such as Motorola, Nortel,
Alcatel-Lucent,

and

Nokia-SiemensSamsung,

and

testing

device

manufacturers such as Agilent, Tektronix, AT4, Wireless, and R&S could be

introduced to the domestic market to fill industry gaps and achieve mutual
benefit.
In the area of midstream devices, Taiwans network communications
companies, such as ZxXEL, Accton, Cameo, Quanta Microsystems, and

Gemtek, are all involved in WiMAX techonology development and product

manufacturing. As for CPE, Taiwan has had a long and close working
relationship with internatioal telecom manufacturers such as Motorola, SR
Telecom, Alcatel, and Sprint. For example, ZxXEL has already shipped
products to Sprint Nextel, while both ZxZEL and Quanta Microsystems will
supply WiMAX devices to Nortel. In addition, with Intels support, ASUS is
exhibiting its WiMAX-supporting Ecc PC at the 2008 International CES expo.
Many more companies are launching wireless network devices in step with
WiMAX technology.
WiMAX Industry Supply Chain in Taiwan

Source: Compiled for the present study, 2007/12

(III) Major Suppliers in Taiwan

Key WiMAX Suppliers in Taiwan

Source: Compiled for the present study, 2007/12

In the area of midstream testing, of the six WiMAX verification

laboratories around the globe, four are located in China, Europe, Korea, and
the U.S., while the other two are located in Taiwan. Two local companies,
ADT and Aloha, have been certified by the WiMAX Forum as a provider of
fixed and mobile WiMAX verification services. With the support of local
WiMAX cerification labs, Taiwanese manufacturers can cut down on the
time required for testing and verification, speed up WiMAX R&D, and
enhance their competitiveness.
In the area of downstream operations and services, licesed operators
such as Global Mobile Corp., VMAX Telecom, First Telecom, Far Eastone,
Tatung Infocomm, and Vastar Cable TV System, have already begun base
station construction and will soon be able to provide innovative Web 2.0
interactive services, personalized Internet, integrated communications
services, remote data access, and multimedia entertainment.

III. Optimum Investment Items for Foreign Investors

(I) Taiwan, the Best Choice for WiMax Investment
Taiwan

has

the

following

advantages

for

WiMAX

industry

development:
1.

The Government Implemented M-Taiwan Project

The Taiwan Government has been putting a lot of effort into promoting

WiMAX technology. Total investments in the implementation of WiMAX

Internet access has reached US$664 million, the second-highest in the world.
The MOEA estimates that the output value of Taiwans WiMAX industry will
reach NT$140 billion in 2012.
2.

The Formation of the WiMAX Industry Chain

More and more local manufacturers have been getting involved with the

WiMAX industry under government encouragement, and the WiMAX

industry chain is gradually nearing completion.
3.

Manufacturing Capabilities for End Products

The III indicates that Taiwan accounts for approximately 30% of global

WiMAX CPE product ouput. With orders from international companies such
as Motorola and Sprint constantly coming in, as well as Taiwanese
manufacturers capabilities for effective cost control, Taiwan is expected to
account for 80% of global WiMAX CPE product output within the next 5
years.
4.

Issuing WiMAX Operation Licenses

Radio spectrum licensing was completed in July 2007. It is expected that

the six successful bidders, which are Global Mobile Corp., VMAX Telecom,
First Telecom, Far Eastone, Tatung Infocomm, and Vastar Cable TV System,

10

will be able to provide WiMAX application services by the end of 2008,

making Taiwan the worlds largest commercial WiMAX experiment.
5.

The Involvement of International Manufacturers

Taiwan has successively signed MOUs on technical cooperation with

leading international WiMAX manufacturers including Intel, NEC, Nortel,

R&S, Alcatel-Lucent, Motorola, Nokia Siemens Networks, Sprint Nextel,
and Starent, keeping it always one step ahead in the mastery of international
standards and specifications.
6.

Active Participation in the WiMAX Forum

The WiMAX Forum is the only non-profit organization for the

promotion of WiMAX industry development. Products tested and certified by

the WiMAX Forum are compatible with different service systems such as the
fixed line and portable mobile communications systems. At present, with 13
principal and 23 regular members from Taiwan, the WiMAX Forum has over
520 members, comprised mainly of operators as well as component and
equipment companies. Through its participation in the WiMAX Forum,
Taiwan is able to keep up-to-date on the Forums certification system
techonolgical standards and to launch WiMAX products that fit the
requirements. Moreover, through close interaction with related industry
players, Taiwan is able to share with the world its experiences in promoting
the WiMAX industry and M-Taiwan Project.
The future of WiMAX development lies in Asia, and its opportunties in
Taiwan!

11

Taiwans Superior Environment for WiMAX Development

Source: Organized for the present study, 2007/12

(II) Investment Niche and Suitable Investment Categories

As long-term competition within the WiMAX industry fuels the rapid
expansion of the global market, Asia will become a crucial region for
WiMAX development. Taiwan is the third country in Asia to make radio
spectrum available for WiMAX. An estimated 1,000 base stations will be
completed by 2008 and 20,000 by 2012, making Taiwan the worlds largest
commercial WiMAX experiment. Through the WiMAX industry chain and
successful operations model established in Taiwan, the WiMAX business
model, products, and application services can be replicated and transplanted
to the neighboring region, even to the rest of the world.
At present, promising investment categories in the WiMAX industry
include:

12

1. Manufactoring WiMAX Components

At the moment, there are still very few companies in the industry chain
involved in chips, ASN Gateway, and core network integration-related work.
Foreign investors with an edge in R&D could easily fill these gaps in the
industry chain and enhance the industrys global competitiveness.
2. WiMAX Testing Services
Two of only six WiMAX Forum-certified verification laboratories in the
world are located in Taiwan. The spotlight of future WiMAX development is
trained on the Asia-Pacific region, and Taiwan is set to become the regional
WiMAX verification service center.
3. WiMAX Operations
Success in the WiMAX industry requires not only technological
development but also attractive services, and popularization is key. This
means that the business model and application services are

worthy of

investment. For example, having completed its phase-I capital increase at the
end of 2007, Global Mobile Corp. successfully attracted many digital content,
electronic networking communication, service industry, systems integration,
and telecommunication industry companies to Taiwan, and a WiMAX Digital
Content Alliance was formed for the joint promotion of local WiMAX
industry chain development.

13

IV. Successful Examples of Cross-Border Strategic Alliances

and Foreign Investment in Taiwan
(I) Nortel Networks
Nortel Networks is a famous Canadian telecommunication device
provider; it is the worlds leading provider of optical networks, GSM/UMTS,
CDMA, WiMAX, IMS and enterprise communications platforms.
In 2006, Nortel collaborated with National Taiwan University to
establish its Center of Excellence for WiMAX Devices on the island. The
new Center of Excellence supports field testing and the demonstration of a
wide range of high-bandwidth multimedia applications such as VoIP, video
streaming, IPTV, and digital video recorders, as well as the transmission of
data between WiMAX, Wi-Fi, and 3G platforms when using PDAs, laptop
computers, and Wi-Fi handsets. Testing devices for interoperability will be a
key focus of the new center.
Nortel chose Taiwan as the home of its Center of Excellence for WiMAX
Devices because of the islands leading position in the WiMAX industry, and
the governments determined implementation of the M-Taiwan Project.
Furthermore, Nortel enjoyed great collaborative experiences as a participant
in wireless infrastructure development for both Taipei City and Kaohsiung
City. Through cooperation, local companies can get involved in R&D
firsthand, participate in decisions on the format and technology of WiMAX
terminal products, integrate related applications and testing networks, and
provide packaged end-to-end solutions. At this center, Taiwanese companies
can develop many related products, such as base stations, computer cards,
mobile phones, USB ports, and PDAs. Several Taiwan companies will
collaborate with Nortel to manufacture new products with Nortels device
protocols. In future, Nortel may authorize Taiwanese companies to

14

manufacture WiMAX mobile phones or PDAs under the Nortel brand. This
collaboration will surely speed up WiMAX market development.

(II) Rohde & Schwarz

Rohde & Schwarz (R&S) is an international manufacturer of test and
measurement equipment in Germany, and a leader in wireless communication
measurement,

broadcast

monitoring/positioning,

signal

mission-oriented

generators,

mobile

communication

systems,

radio
and

equipment calibration.
Thanks to the development potential of the Asian market and Taiwans
important position in the wireless communications domain, R&S established
Rohde & Schwarz Taiwan in 2003. Through Taiwans strategic location, R&S
seeks to build a comprehensive Asian technical service network by more
tightly linking all of its Asian divisions and providing its customers with the
latest in German technology.
The R&S TS8970 WiMAX test system has been approved by the
WiMAX Forums Certification Working Group and Technical Working
Group, and can now be used as the certification and testing platform for
WiMAX 802.16e RCTT (radio conformance test testers). It provides the
perfect solution for WiMAX 802.16e final product certification.
In 2006, R&S was the only WiMAX test platform chosen by the
M-Taiwan

Project.

R&S

collaborated

with

the

MOEA (Industrial

Development Bureau) to help the IIIs Networks and Multimedia Institute set
up a WiMAX development and testing lab for the development of
WiMAX-related products such as chipsets, BTS, and CPE common standard
certification platforms, and to expand WiMAX certification equipment
15

capabilities. With their help, Taiwanese companies are now able to perform
product certification and validation during the early stages of development.
The MOUs on WiMAX technical cooperation signed between Taiwan
and major international manufacturers will accelerate WiMAX R&D, as well
as the development of application services and business models. Through the
M-Taiwan Project, cooperating firms will work together to develop and test
new products and applications as pioneers in the global market
Summary of 2007 WiMAX Cooperation Memos Signed between Taiwan and
Major International Manufactueres
Company

Content of Cooperation Memo

Alcatel-Lucent

To cooperate in the R&D of chips, CPE, and other parts

and components; to set up IOT testing and certification
center in Taiwan.

Motorola

To cooperate in interoperability testing (IOT) and to speed

up the implementation of WiMAX networks in Taiwan.

Nokia Siemens Networks

To support WiMAX facilities and innovative application

services in Taiwan; interoperability testing (IOT).

Sprint-Nextel

To cooperate in IOT and international roaming services

and to introduce innovative application services.

Starent

Technical operation with manufacturers of WiMAX

facilities in Taiwan; to promote interoperability testing.

Source: Compiled for the present study, 2007/12

16

V. Industrial Investment Incentives

In a bid to facilitate the rapid development of the WiMAX industry, the
Taiwanese government offers a variety of investment incentive measures,
including tax incentives, R&D subsidies, low-interest loans, and personnel
training assistance, to assist WiMAX industry players and attract foreign
investments.
Government Investment Incentives
Benefits
Tax

Measures

Contacts

Emerging, important, and strategic

Ministry of Economic Affairs

industries (investment tax credit for

http://www.moeaidb.gov.tw

shareholders or 5-year tax exemption)

E-mail:

Personnel training expenditures (business

service@moeaidb.gov.tw

income tax credit based on 35% of all

Tel: +886-(0)2-2754-1255

training expenditures in the same year)

R&D expenditures (business income tax
credit based on 35% of all R&D
expenditure of the same year)
Accelerated depreciation of facilities
(maximum depreciation period: 2 years)
Tax credit for the purchase of facilities and
investment in technology
Tax-exemption for imported components
Tax incentives for technology transfer or
cooperation
Incentives for the establishment of
operations headquarters

17

R&D
Subsidies

Industrial Technology Development

Department of Industrial
Technology, MOEA

Program (ITDP)
Small Business Innovation Research
Program (SBIR)

http://doit.moea.gov.tw/
Tel: +886-(0)2-2321-2200

Industrial Technology Development

Alliance Program (ITDAP)
Strategic Service-Oriented Industry R&D
Program (SRD)
Information Technology Applications
Program (ITAP)
Industrial Technology Innovation Center
Program for Local Enterprises (MNCD)
Industrial Technology Innovation Center
Program for Foreign Enterprises (MNCF)
Leading Innovative Product Development

Industrial Development Bureau,

MOEA

Program
Enterprise R&D Alliance Program

http://www.moeaidb.gov.tw

Enterprise Operation Headquarters

E-mail:

Service

service@moeaidb.gov.tw
Tel: +886-(0)2-2754-1255

Low-Interest Industrial R& D Loan

Ministry of Economic Affairs

Loans

http://www.moeaidb.gov.tw
E-mail:
service@moeaidb.gov.tw
Tel: +886-(0)2-2754-1255
Low-Interest Loans for Midium- and
Long-Term Capital

Council for Economic Planning

and Development, Executive
Yuan
http://www.cepd.gov.tw/
Tel: +886-(0)2-2316-5300

Project Loans for Small and Medium

Enterprise

Small and Medium Enterprise

Administration, MOEA
http://www.moeasmea.gov.tw
E-mail:
solution@moeasmea.gov.tw
Tel: +886-(0)2-2368-6858

18

Bank Draft and Loan Preferences for

Development Fund, Executive Yuan

National Development Fund,

Executive Yuan
http://www.df.gov.tw/
E-mail: df@df.gov.tw
Tel: +886-(0)2-2389-0633

Low-Interest Loans for Science Parks

Science Park Administration

http://www.sipa.gov.tw/
Tel: +886-(0)3-577-3311

Personnel

International Experts Recruitment

Training

HiRecruit Services
http://hirecruit.nat.gov.tw/
E-mail: hirecruit@taitra.org.tw
Tel: +886-(0)2-2370-9687

Alternaive National Service Application

Military Training Project Office

http://rondi.mnd.gov.tw
E-mail: mndsys@iii.org.tw
Tel: +886-(0)2-2736-8088#3414

R&D Aletrnative Service

R & D Substitute Service

Program Office, Ministry of t he
Interior
http://rdss.nca.gov.tw
E-mail: rdss@mail.nca.gov.tw
Tel: +886-(0)2-2736-6066 #206

Source: Compiled for the present study, 2007/12

19

VI. Industry-Academia Collaboration in Taiwan

Taiwan is actively promoting WiMAX industry development through
the integration of its government organizations and industry associations.
Collaborating Promotional Institutions in Taiwan
Institution

Website

Industrial Development Bureau, MOEA

www.moeaidb.gov.tw

Department of Industrial Technology, MOEA

www.doit.moea.gov.tw

Department of Investment Services, MOEA

www.dois.moea.gov.tw

Committee of Communication Industry Development,

www.communications.org.tw

MOEA
Mobile Taiwan Applications Promotion Program Office,

www.pwlan.org.tw

MOEA
Taiwan External Trade Development Council

www.taiwantrade.com.tw

Taiwan Electrical and Electronic Manufacturers Association

www.teema.org.tw

Industrial Technology Research Institute

www.itri.org.tw

Institute for Information Industry

www.iii.org.tw

Telecom Technology Center

www.ttc.org.tw

Source: Compiled for the present Study, 2007/12

20