Asustek Computer Inc's (華碩電腦) third-quarter shipments will probably rise more than a quarter after Taiwan's No. 1 maker of boards that hold computer chips cut prices to win more orders from clients such as Dell Computer Corp.
Motherboard shipments for the three months ending Sept. 30 may rise to 4.5 million units from 3.5 million a year earlier after Asustek clawed market share from rivals, David Chang, Asus-tek's deputy financial controller, said in an interview.
Dell and other large personal-computer makers that buy motherboards from Taiwanese suppliers are demanding lower prices as they cope with the industry's worst slump. Asustek's gains will come at the expense of lower margins, some investors said.
"Dell and Hewlett Packard Co have been using their muscle," said Ben Akrigg, who counts shares in Asustek among the US$2.5 billion he helps invest for Morley Fund Management. "Dell's definitely been increasing outsourcing."
Asustek's second-quarter gross margin -- or sales minus the cost of goods sold divided by sales -- fell to 15.2 percent from 16.5 percent in the first quarter, Chang said. Last year, Asustek's gross margin was 20 percent.
"Price pressure is quite tough," he said. "We're trying to cut costs."
Asustek has to keep rates competitive as demand for personal computers wanes and rivals keep snapping at its heels. Hewlett-Packard has shifted some orders from Asustek to Micro-Star International Co (
Sales of personal computers fell 0.5 percent to 31.1 million units in the three months ended June 30 from a year earlier, marking the fifth consecutive quarterly decline, market researcher International Data Corp earlier said.
Micro-Star declined to give third-quarter sales expectations.
Third-quarter motherboard shipments from Taiwan and China, which account for more than 90 percent of the world's supply, will rise 3.8 percent from a year ago, the Taiwan government-run Market Intelligence Center (市場情報中心) said on its Web site. The value of shipments will slide 4.8 percent in the same period, the organization said.
The average selling price of a motherboard in the third quarter will fall to about US$65 from US$70 in the same period a year ago, according to the Market Intelligence Center.
Taiwan has more than 30 listed makers of printed circuit boards.
Asustek said it hopes to improve profit in the third quarter on increased sales of boards for Sony Corp's PlayStation 2 video-game console. The company started making boards for the console during the second quarter.
The shares of Asustek fell NT$3, or 3.7 percent, to NT$79 yesterday.
The volume of trading in the shares was the sixth-largest on the Taiwan stock exchange. Micro-Star shares fell NT$3.5, or 3.8 percent, to NT$89.5.
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