Tue, Jan 14, 2003 page10

• SiS may be about to overcome VIA

  • By Bill Heaney / STAFF REPORTER
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  VIA Technologies Inc (威盛電子) may see sales slip this year because of strong-arm tactics from its closest rival, Silicon Integrated Systems Corp (SiS, 矽統科技), analysts said yesterday.

  "VIA's shipments in 2003 will decline because SiS is aggressively trying to take some of VIA's market share," Eric Chen (陳慧明), an analyst at Nomura Securities in Taipei, said.

  VIA is expected to report sales of nearly 35 million chipsets for the year just ended, but Chen said the company will struggle to break the 27 million mark this year.

  Supplying around 21 percent of the global chipset market, VIA is currently the world's second-largest designer of the chips that allow computer components -- such as memory and graphics -- to communicate with the main processor.

  SiS follows closely, taking 19 percent of the global chipset market. This year SiS aims to take VIA's No.2 spot, Chen said. US-based Intel Corp leads the world with a 60 percent market share.

  VIA's ability to stave off an attack from SiS will be hampered by the fact that it has not been granted the license to make the chipsets for Intel's latest Pentium4 processor.

  SiS on the other hand has been granted the license. SiS also has its own chipmaking plant, giving it more room to cut prices, unlike VIA which outsources its chip manufacturing to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).

  "VIA's problem is that it has been blocked by not receiving the Pentium4 license," Chen said. "SiS is very aggressive in pricing, whereas VIA's room for cutting prices is very limited."

  Uninspiring product plans for this year may cause VIA to fall even further behind.

  "VIA has no killer products in its road map for 2003," Chen said.

  Its rivals do. "Intel has a very competitive product road map for 2003," said Sharon Su (蘇豔雪), chief researcher at UBS Warburg in Taipei.

  Su cited a recently announced alliance between SiS and Taiwan's No.2 maker of made-to-order chips, United Microelectronics Corp (UMC, 聯電), as an added weapon in SiS' arsenal.

  SiS and UMC recently ended a patent dispute that had dragged on for more than two years. The first result of the settlement is that SiS can now begin to order chips from UMC again, increasing the company's production capacity. Details of the alliance are to be announced today at a special board meeting in Hsinchu.

  VIA's close ally, US-based Advanced Micro Devices (AMD) is not faring well either, and will continue to lose market share to Intel, Su said.

  Chen estimates that less than 5 percent of the chipsets sold globally are supplied by AMD. Around 40 percent of the chipsets VIA sells are for AMD processors.

  UBS Warburg downgraded its forecast for VIA, as did Nomura.

  Su slashed her forecast for VIA's sales performance for this year by 10 percent yesterday, from 32 million units down to 28.7 million. She also forecast the company's share price would drop to NT$30. VIA's shares ended 3.3 percent up yesterday at NT$40.7.

  SiS ended the day up 6.7 percent at NT$31.6.
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