Published on Taipei Times
http://www.taipeitimes.com/News/biz/archives/2006/09/13/2003327470

Elitegroup to make PC motherboards for Intel

TARGETING CHINA: With at least 120,000 cyber cafes, China's strong demand for desktop PCs caused the US chip giant to choose a Taiwanese partner to cut costs
By Jason Tan
STAFF REPORTER
Wednesday, Sep 13, 2006, Page 11

Elitegroup Computer System Co (ºë­^¹q¸£), the nation's leading motherboard maker, yesterday said that it will start supplying motherboards to chip giant Intel Corp in a deal designed to tap into China's massive Internet cafe market.

"Intel has chosen us to supply motherboards. The deal is simple as Intel wants a supplier with ample supplies to forge a long-term relationship," said an Elitegroup official who spoke on condition of anonymity.

Both companies held a press conference in Beijing yesterday to announce the partnership, the official said.

"Internet cafes are hot and they bring up the PC demand there," the official added.

Currently, there are over 120,000 Internet cafes in China that are officially registered with the government. That translates to a market demand for 8 million desktop computers, the Chinese-language Economic Daily News reported yesterday.

The desktop figure could reach 10 million if unregistered cyber cafes were taken into account, it said.

The mushrooming number of the computer cafes has attracted the attention of chip makers Intel and Advanced Micro Devices Inc (AMD), as well as graphic chip designers Nvidia Corp and ATI Technologies Inc.

The paper quoted industry sources who said that because rival AMD's processors have acquired a 70 percent share of China's Internet cafe market, Intel is now aggressively striving to make up lost ground and increase its share to at least 50 percent.

Intel has been pushing its Platform Administration Technology, which is a platform solution for small-sized and medium-sized network environments such as Internet cafes. It hopes its solution will become the standard platform for Internet cafes in China.

But instead of using its own brand of motherboards this time, Intel has opted to use products made by Elitegroup to lower costs and boost competitiveness, the paper said.

According to Elitegroup's statistics, the company's total motherboard shipments stood at 5.6 million units in the second quarter, a rise of 21 percent from a year earlier.

Shipments for the first two months of the third quarter were slow but the company expects them to rise this month, it said.