VIA's pretax profit dives 64% on slumping demand

VIA Technologies Inc (威盛電子), the second-largest designer of personal computer chipsets, said its profit before tax fell 64 percent in the third quarter on lower demand and greater competition from rival Intel Corp.

The company's pretax profit for the three months to Sept. 30 fell to NT$880 million (US$25.5 million), or NT$0.93 a share, from NT$2.5 billion, or NT$2.59, a year ago. VIA, which expects to improves sales by selling computer motherboards, said it will provide after-tax earnings numbers by the end of the month.

"There should be some improvement in the fourth quarter," said Allen Tsai, who helps manage NT$3 billion at Barits Investment Services Corp (倍立投顧) and who owns VIA shares. "The company's chipset sales should increase and now its selling motherboards."

VIA lost market share to the biggest chipmaker, further hurting earnings as the global economy slowed. VIA lost some of its 40 percent share of the US$3 billion market for chipsets after a legal battle with Intel over patents. That tussle made customers reluctant to buy VIA's latest products, analysts said.

VIA, which has a dispute with Intel over whether its chipsets violate the Santa Clara-based company's patents, said earlier this month that it will begin selling PC motherboards under the company's own brand to counter the Intel lawsuit.

"The Intel lawsuit will affect our market share and margin," said Ted Lee (李聰結), a VIA vice president. "We will compete with Intel in the motherboard business."

VIA said it eventually expects to sell more than one million motherboards per month. VIA didn't give a deadline for the target.

The Taiwan-based company earlier said it will hire companies in China to manufacture the motherboards, which contain the circuit wiring to connect chips and other computer components.