Taiwan manufacturers see DVD as growth area...............
Austek may convert some production to DVDs. . .
japanbiztech.com
Mainboard Manufacturers Face
Production Drop
June 28, 1997 (Taipei) -- Taiwan motherboard makers are
experiencing a 10 percent drop in production output.
Industry watchers say the downward tendency may be a reflection of a
"wait-and-see" attitude from consumers confused by Intel's quick
introduction of both the MMX chip and the Pentium II chip within a
short time.
Ever since the introduction of the Pentium II in early May, Taiwan
board makers have been utilizing only half of their production capacity
as a result of insufficient orders and a short supply of Intel 430 TX
chipsets. The chipsets have low yield rates.
Manufacturers hope they're seeing just a temporary lull before the
advent of a good Christmas order season.
Taiwan motherboard shipments decreased from 9.36 million units in the
first quarter to an estimated 8.42 million units in the second. The
reduction rate is the largest single-quarter decline in two years. First
quarter production was already 8.8 percent less than the fourth quarter
of 1996.
In terms of Taiwan motherboard production during the first half of
1997, Pentium-class models accounted for 91 percent, Pentium Pro
based has a 5.6 percent share, Intel 486 and the highest-end Pentium II
each amounts to less than 2 percent.
But judging from Intel's aggressive promotion campaign of Pentium II
chips, local analysts project a 2:3 ratio of slot-one motherboards versus
socket-seven versions in 1998.
Against the competition of the conventional low-cost socket-seven
(with AMD K6 or Cyrix M2) motherboards, Intel is said to be aspiring
to make Pentium II the mainstream CPU on the market, by putting
Pentium II not only in regular PCs but also in Intel-made Net PCs.
On top of that, the emergence of a low-priced PC is likely to
substantially cut down profit margins on motherboards, do-it-yourself
PCs and non-brand clone PCs.
Recently, motherboard prices have been squeezed to as low as US$50
a piece because AST, Packard Bell-NEC, Compaq and Acer are all
selling PCs with a price tag of under US$1,000.
Even Taipei-based Asustek Computer Inc., which used to insist on a
high-quality high-price policy, has been forced to come up with a few
motherboard models priced at just US$85.
Asustek's move in turn compromised the profit margins of other local
board makers.
Razor-thin margins and fast turn-over rates threaten to force a reshuffle
in the industry.
When the entry threshold of motherboard production declines as the
result of dropping prices, quantity, rather than technology, becomes the
crucial element in the contention for OEM orders.
And Intel's influence on the outcome of reshuffling seems ever
increasing.
In fact, some local board makers are diversifying to avoid over-reliance
on few single sources of orders.
Asustek's process line will roll out notebook PCs in August. Before
long, Asustek will make DVDs as well.
Taipei-based Elitegroup Computer Systems Co Ltd, a leading
motherboard maker, is aggressively transforming itself into a maker of
PC systems.
At the same time, lower costs of land, labor and favorable tariffs to
Europe are causing them to gradually relocate production bases to
China.
Currently, about 40 percent of shipment by Taiwan-based board
makers are actually carried out in China, with two production clusters in
Shenzhen and Tongyuan, not very far from Hong Kong.
(Charlene Huang)
Biztech Asia Correspondent - 06/28/97 |
