PC Chips takes over Soyo; more mobo makers to fall
As second-tier motherboard makers continue to lose money, they are expected to increasingly fall prey to takeovers by investors or be forced out of the market in the second half of the year, as seen by the recent takeover of Soyo Computer by members of the Taiwan-based PC Chips Group, according to sources at the makers.
A number of investors representing China-based "Leng Teng" (transliterated from Chinese) Electronics, a member of the PC Chips Group, recently bought a majority stake of Soyo's NT$390 million capital expansion plan through a private placement, the sources said.
Soyo completely reshuffled its board of directors and supervisors following the capital expansion in July, with personnel related to PC Chips taking a majority of seats on the board, according to sources at Soyo.
PC Chips was founded by Johnson Chiang, chairman of Elitegroup Computer Systems (ECS). However, ECS said that the company had nothing to do with Soyo's takeover.
In addition, Soyo recently told its shareholders that in the near future it plans to expand its product mix to include computer connectors and heat dissipation modules, which happen to be the core products of Leng Teng.
Soyo is expected to register pre-tax losses of NT$120 million, or NT$1.23 per share, in the first half of this year, although the company's first-half shipments of 300,000 motherboards equaled the full year total from last year, Leng Teng produces electrical connector products using technology licensed from Tyco Electronics.
Low-cost Mobile Sempron notebooks to hit market
Notebook vendors, including Hewlett Packard (HP), Acer, Asustek Computer and eMachines, are expected to start marketing low-cost, entry-level notebooks, running Advanced Micro Devices' (AMD's) K8-core Mobile Sempron processors in the middle of the third quarter, according to sources at the makers.
The K8 Mobile Sempron notebooks are likely to receive some momentum in the global notebook market in the second half, thanks to the delay of Intel's Alviso chipsets, the sources said.
With simple adjustments, makers can easily upgrade their notebooks from a K7 to a K8 platform without involving any redesign to the motherboards, the sources stated.
How quickly vendors ramp up sales of Mobile Sempron notebooks is key for AMD in the race with Intel for the world's notebook CPU market share, said the sources.
Asustek trumpets tweak for PCIe , amid Gigabyte complaints
Asustek Computer today released details of a feature in its 915P and 925X-based motherboards' BIOS called PEG (PCI Express Graphics) Link mode amid cries of foul play' from Gigabyte.
The main complaint was that Asustek's failure to mention this feature with the announcement of the new boards invalidated recent product tests and misled end users about the real performance of the product, according to Gigabyte product manager Rockson Chiang. Gigabyte has no problems with Asustek including features like PEG Link mode with their motherboards, as long as they are mentioned in the product literature, said Chiang. When contacted about the controversy, a representative for Asustek told DigiTimes that it was just a misunderstanding and gave DigiTimes exclusive scans of the manual. Page 26 of chapter 4 clearly shows PEG Link Mode is in the manual.
According to Asustek, PEG Link Mode, which is at the center of the storm, is found only on its 915P- and 925X-based motherboards and allows users to raise GPU and VGA memory throughput via the BIOS the same way the system and memory buses are tweaked. The company added that PEG Link mode can be used to increase video performance on Microsoft DirectX 8 and 9 applications. Under PEG Link mode, there are five settings: Auto, Slow, Normal, Fast and Faster. The default setting is Auto, which means the motherboard automatically adjusts to match the graphics card frequency set by the system configuration.
Graphics card makers positif on nVidia price cuts
Taiwan graphics card makers have responded positively to nVidia's recent price cuts for a range of its graphics chips, stating that the chipmaker's move will help reduce their production costs and boost demand. nVidia recently cut prices about 10% on some of its graphics chips, with the mid- to high-end GeForce FX5700LE dropping to under US$40, the mainstream GeForce FX5200LE falling to under US$20 and the entry-level GeForce MX4408X and MX4000 dropping to US$12-13. Although the price cuts were part of nVidia's efforts to dress-up its quarterly revenues, local makers have reportedly taken advantage by ordering more chips with the expectation that demand will pick up as the industry moves into its traditional peak season.
In related news, nVidia has now added Biostar Microtech International to its client list. Biostar aims to ship about 100,000 VGA cards a month, with a significant portion bundled with its motherboards and own-brand iDEQ mini barebone systems, according to sources at Biostar.
ATI: Demand for PCI-E VGA chips continues to grow
ATI Technologies has continued to increase its wafer starts at Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) because demand for ATI's PCI Express graphics chips is seeing steady growth, ATI chairman Ho Kwok-yuen stated.
The impact of the recent recall of Intel 915/925 chipsets on demand for PCI Express VGA chips was limited, and the production of PCI-E graphics chips will account for 40% of ATI's total VGA chip production by year-end, Ho said.
ATI expects to see increasing demand for PCI-E VGA chips from system integrators (SI) and the channel, in addition to PC OEMs, Ho claimed.
Due to efforts by ATI to promote sales among PC OEMs and in the channel, ATI saw its share of the desktop-use discrete VGA chip market rise to 46% in the second quarter, up from 43% in the first quarter. Ho cited data recently released by Mercury Research.
Mobo makers expect 15-20% growt
Taiwanese first-tier mobo makers claim seasonal demand is growing steadily in the third quarter, and shipments are expected to increase 15-20% from the second quarter.
Third-quarter combined shipments of the top four makers - Asustek Computer, Elitegroup Computer Systems (ECS), Gigabyte Technology and Micro-Star International (MSI) - are expected to hit 21.68-21.83 million units, compared to 18.66 million units in the second quarter, according to sources at the makers
TFT makers expect oversupply of panels in 2H
TFT LCD makers and market research firms expect to see a 5-8% oversupply of panels in the second half of this year. Most makers expect the oversupply to ease a bit in the fourth quarter on sliding panel prices and production reallocation from LCD monitors panels to notebook panels.
Chunghwa Picture Tubes (CPT) projects supply to exceed demand by 12.1% and 10.8% in the third and fourth quarter, respectively. However, the overall oversupply should in fact remain at only 5-8% in the second half, as companies reduce production and reallocate capacity.
AU Optronics (AUO) forecasts supply to surpass demand by 5% in the third quarter and then ease to 3% in the fourth quarter. Samsung optimistically estimates a mere 0.2% oversupply in the third quarter, with a slightly higher oversupply (1.2%) in the fourth quarter.
DisplaySearch expects an oversupply of 12% in the third quarter on diminishing demand and larger capacity from TFT LCD makers. In the fourth quarter, oversupply should slide to 8% as demand begins to pick up. However, a possible tight supply of key components would result in an oversupply of only 6% in the third quarter, according to DisplaySearch. Taiwan-based Topology Research, however, projects an oversupply of 8% in the third quarter and of 6% in the fourth due to increased demand for notebooks and LCD TV's in the fourth quarter.
Intel dual-core processors ahead of schedule
Intel plans to unveil a dual-core processor, codenamed Smithfield, in mid-2005 instead of sometime in 2006, as originally planned, according to sources at Taiwan motherboard makers.
Intel plans to roll out three versions of the Smithfield processor. One version will be targeted for the performance segment and will be supported by the Glenwood chipset. Two mainstream versions will be supported by the Lakeport chipset, the sources noted.
The Smithfield processors will be resident in socket LGA-775, currently in use on Intel 915/925 motherboards. This will limit the impact on motherboard makers as they move to the new platform, the sources explained. Motherboard makers have welcomed this move by Intel, the sources added.
The Smithfield dual-core processors will be built using a 90nm process. The first dual-core processor from Advanced Micro Devices (AMD), for the desktop, codenamed Toledo, is slated for launch in the second half of 2005.