Gigabyte's low-end motherboards set to inflame competition

The shipments of Gigabyte Technology Co's (技嘉科技) low-end motherboard products in the second quarter are expected to fuel competition in this already competitive sector during the traditional low season, analysts said yesterday.

Gigabyte is scheduled to launch its low-end brand, Gigatrend (倍嘉), later this month.

"Gigatrend's first shipment, scheduled for next month, may stimulate the already competitive low-end product market," said Chris Wei (魏傳虔), an analyst at the semi-official technology researcher Market Intelligence Center (市場情報中心).

Last year, Taiwan shipped 103.5 million mainboards, almost 20 percent more than in the previous year, according to figures from the center.

Wei said the industry performed well in the supposedly slow first quarter because customers' inventories were low, the Lunar New Year came early and Intel has cut prices on some products.

Shipments by Taiwanese makers in the second quarter, however, may drop 4.4 percent to 25 million units, from 26.1 million units in the first quarter.

The nation's largest motherboard maker, Asustek Computer Inc (華碩), made inroads into the low-end motherboard market in 2002 by launching its second brand, ASRock (華擎). The company expects to double shipments this year to 8 million units.

Gigatrend, which is targeting China, South America and some European countries, could again spark competition in the sector, Wei said.

"However, since competition flourished in 2002 among these major players, when they launched of a series of similar products to contend with second-tier players such as Chaintech Computer Co (承啟) and Shuttle Inc (浩鑫), I think there is now limited room for growth in the low-end product market," Wei said.

Gigabyte dismissed the concerns, saying that its customers needed low-end products.

"We will have label differentiation between our high-end products under the brand of Gigabyte and low-end motherboards under the brand of Gigatrend," Gigabyte spokesman Tony Liao (廖期立) said yesterday, adding that Gigatrend would help expand the company's business base.

The cut-throat competition of last year may dissipate by the second quarter because of the soaring price of raw materials such as printed circuit boards.

In addition, Intel's new central processing unit, Prescott, which is scheduled to enter the market in the second quarter, may help high-end product makers, Wei said.

Another analyst agreed, saying that the launch of Prescott may strengthened motherboard makers.

"The outcome, however, hinges on whether Intel can launch the new product in time and what the market response to the new chip is," said Chou Chin-chung (周建忠), an analyst at Grand Cathay Securities Co (大華證券).