Network equipment makers may receive windfall orders from Alcatel-Lucent, say sources

Taiwan-based network equipment makers are expected to receive a windfall of orders from Alcatel-Lucent amid market reports speculating that the France-based telecom solutions provider plans to increase its outsourcing of cable and wireless broadband products, according to market sources in Taiwan.

Alcatel-Lucent is likely to release more orders for VDSL switches, remote DSLAM equipment and optical switches. In addition, Alcatel-Lucent is also expected to place a large portion of the outsourced orders with ODM makers, while reducing its contracts with EMS firms, the sources noted.

Alcatel-Lucent already held cooperation talks with ODM makers in Taiwan and China in the first quarter of this year, and Taiwan's ODM makers have good chances of winning more orders due to their mature ODM capabilities, contended the sources.

Most of the shares of Taiwan major network equipment makers and EMS firms that are currently cooperating with Alcatel-Lucent, including Zyxel Communications, Accton Technology, Microelectronics Technology (MTI), Tecom, Foxconn Electronics (Hon Hai Precision Industry) and Asustek Computer, closed higher on the Taiwan Stock Exchange (TSE) on April 7 amid speculations of Alcatel-Lucent orders.

Alcatel-Lucent revenues accounted for 5%, 10% and 20% of Zyxel's, Accton's and MTI's total revenues, respectively, in 2008, according to a Chinese-language Commercial Times report.