Analysts advise VIA to cut prices to keep market share

VIA Technologies Inc (威盛電子), which tripled computer chipset sales last year at Intel Corp's expense, will need to cut prices as rivals threaten its ranking as the second-largest company in the business, analysts said.

VIA will probably cut prices of its chipsets, which manage the flow of data between a processor and other parts of a computer, by as much as a quarter next month, according to Rick Hsu (徐禕成), an analyst with Nomura Securities (野村證券) in Taipei.

"If VIA wants to maintain market share, it has to sweeten prices," said Hsu. "VIA will just go for rebates with certain preferred customers." Sales in second quarter are typically slow for computer-related companies, which sell most of their products during the year-end back-to-school and holiday seasons. Even taking that into account, VIA's sales have been "quite gloomy," Hsu said.

VIA will cut prices under pressure from Intel, the biggest chipmaker, which regained market share in recent months from VIA, the CTech Web site said, citing unidentified PC makers in Taiwan.

Intel cut chipset prices in April and May to stimulate sales, said the technology news Web site run by Taiwan's biggest newspaper.

While price cuts will impact VIA's sales and profit, the company will benefit from lower prices for silicon wafers that it buys from Taiwan Semiconductor Manufacturing Co (台積電). The largest chipmaker to other companies' specifications is offering customers rebates of as much as 12 percent, Hsu said.

Taiwan, which accounts for more than half of the world's PC production, will hold the Computex PC show next week, where VIA and rivals will introduce new chips.

VIA fell NT$7, or 2.6 percent, to NT$261. The shares were the most actively traded by value on the Taiwan Stock Exchange. VIA's shares rose 43.4 percent this year.