Elitegroup to re-tap graphic-card market

Taipei, June 6, 2005 (CENS)--Taiwan's Elitegroup Computer Systems Co., Ltd. (ESC) has decided to re-join the graphic-card market in the fourth quarter this year and is seeking to form strategic alliances with local counterparts on joint procurement or capacity sharing.

Industry sources said that ESC might try to tie up with Giga-Byte Technology Co., Ltd., another leading board/card maker in Taiwan, so as to fight against the increasingly strong Asustek Computer Inc.

In the past, Asustek, Gigabyte, Micro-Star International Co. (MSI) and ESC were the top-four motherboard makers in Taiwan with similar annual shipment volumes. But the industry's ecology changed drastically in the past two years as Asustek launched a series of aggressive tactics and has greatly boosted its motherboard sales. Last year, Asustek shipped about 40 million motherboards, about the combined total of the other three counterparts.

ESC, Gigabyte and MSI have been trying to diversify their product lines or set up strategic alliance to counter the market-dominant status of Asustek. A senior ESC official said that it once tied up with Gigabyte for joint procurement of key parts and capacity sharing.

Some investment banks are also optimistic about the mergers among some first-tier motherboard makers in Taiwan due to Asustek's leading market position. In fact, some foreign institutional investors tried to promote the merger between Gigabyte and MSI, but failed.

Industry sources noted that Hon Hai Precision Ind. Co. Ltd., the world's largest maker of connectors, barebone PCs and TV game consoles, has been also actively tapping the board/card original equipment manufacturing (OEM) business these years and is expected to ship about 40 million motherboards and about five million graphic cards (contract production for C.P. Technology Co., Ltd. And Leadtek Research Inc.) this year.

ESC just announced an advanced motherboard model, the PF-88, which is the world's first such product that can simultaneously support Intel and AMD's (socket 939). This motherboard is a socket 775 one, based on SiS 656 chipset. Then, ECS sells an adaptor board with a socket 939, two DDR400 sockets and SiS 756 chipset.

According to ESC president Chen Ming-tsuen, his company aims to ship 20 million motherboards and one million notebook PCs this year. In addition, the company will develop consumer-electronic products and return to the graphic-card market too.

Chen stressed that ESC will meticulously re-tap the graphic-card market as the memory prices float drastically, adding that the firm will not rule out seeking chances for conducting joint procurements in cooperation with other counterparts or releasing contract-production orders so as to expand scale of economy.

According to ESC, Asustek is expected to ship about 10 million graphic cards this year, compared to eight million cards for MSI and four million cards for Gigabyte.