August 30, 2006
Global motherboard heavyweights Asustek and Gigabyte yesterday announced they will form a joint venture to produce own-brand motherboards. Gigabyte's own-brand motherboards and graphics cards operations will be spun off to form the new venture, with Gigabyte holding 51% and Asustek 49%.
Johnny Shih, Chairman of Asustek, noted that although Asus will continue own-brand production they will coordinate with Gigabyte to prevent their products from overlapping on the market. Gigabyte's motherboards will target mid to high-end segments, while its subsidiary ASRock will be responsible for the low-end market segment. Gigabyte chairman Dandy Yeh also pointed out that Gigabyte would continue to run its OEM operations for network communications, notebook computers and motherboards.
The joint venture will allow Asustek more sway in setting motherboard prices, as the number of rivals has diminished. In addition to this factor, lower production costs should give both companies the opportunity to increase their gross profit margins. Mergers and consolidation are becoming the major trend in this sector as companies attempt to dwarf the competition with unbeatable economies of scale.
Asustek and Gigabyte motherboards combined account for nearly 80% of the global clone market. Asustek is expected to ship 62 million motherboards this year, with 44 million branded units. Gigabyte will ship a total of 18 million, of which 10 million will be branded.
(Economic Daily News, Taipei Times)
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