Venture's failure will hardly affect Gigabyte revenues

The break-up of a two-year-old joint computer mainboard venture set up by Taiwan's Gigabyte Technology Co (技嘉科技) and China's Legend Holdings Ltd (聯想) is not expected to affect the Taiwanese mainboard maker's sales in China, or its relationship with China's leading computer brand, industry watchers said yesterday.

"The break-up will not hurt Gigabyte too much," said William Fong (方偉昌), an analyst at Primasia Securities Co in Taipei. "Legend is still a key customer of Gigabyte, but the failure of the joint venture indicates that the companies are just business partners for mainboards. Gigabyte had hoped to gain orders for barebone systems and consumer electronics from Legend."

Due to fierce competition from local companies, Gigabyte and Legend set up joint-venture factories in Huiyang and Dongguan with an initial investment of HK$250 million (US$32 million) in September 2001.

At that time, the companies planned to pool resources and procure more orders in partnership from global computer companies, which use mainboards or motherboards as the main circuit board on which computer chips and components are placed.

But the expected orders did not materialize, destroying the joint venture, an official at Gigabyte confirmed yesterday.

"In the past two years we tried to jointly procure orders in order to lower costs, but the results did not fulfill our expectations," Tony Liao (廖期立) told the Taipei Times yesterday. "The two companies in the joint venture have now agreed that it would be better to split."

Echoing analyst comments, Liao downplayed the impact of the news.

"There will be no effect on our relationship with Legend," he said.

But there may be more competition on the horizon for Gigabyte in China from its former partner.

Legend announced Wednesday that it plans to set up a new joint venture with China's Ramaxel Technology Ltd to make mainboards, memory modules and hard disks.