X-bit labs

VIA Technologies' CPU Division May See Profit in 2004.

Category: Chipsets

by Anton Shilov

[ 12/10/2003 | 06:08 AM ]

The President of VIA Technologies said on Saturday that his company’s central processing units division is likely to finally see some profits next year. On the other hand, VIA continued this month its consistent strategy of lowering chipset prices in exchange for market share – a move that is potentially able to put the company in a very negative position from financial point of view.

Dow Jones Business News quoted Wenchi Chen, who said: “People always ask me when our CPU division will turn a profit, and I always decline to comment. But I think that next year, we have high hopes our CPU division will become profitable.”

VIA sells its C3 processors for desktop, mobile, embedded and some kinds of handheld applications. The company has a number of design wins, but there is no information about really successful mass-shipments of devices based on VIA C3 CPUs. Generally, C3 chips receive rather lukewarm welcome from the industry, though, things may change a bit next year.

Seeking the number two position in the Pentium 4 chipset market, VIA Technologies is said to be quoting some of its Quad Pumped Bus-supporting chipsets to first-tier mainboard makers at below $10, according to DigiTimes. VIA is currently trailing Intel and Silicon Integrated Systems (SiS) in the Pentium 4 chipset market and hopes to take second place before the Q2 2004. Even though Intel’s lowest-end chipsets for the Pentium 4 processors are priced at $21, some say that the Santa Clara, California-based chipmaker sells its i865PE core-logic at $25, a 22% less compared to the official price.

Dumping strategy may lead to rapid gain in market share, but may also significantly decrease company’s profitability. Silicon Integrated Systems, a rival of VIA Technologies, has been suffering from losses in 2001 – 2002 trying to expand its market presence by offering lowest-priced chipsets. This year the company is finally likely to turn profitable, after a major shift of the strategy.

VIA Technologies’ sales have been in red since late 2001, when the company’s dispute with Intel Corporation over Quad Pumped Bus license started. After settling with the chip giant earlier this year, VIA chipset business began to improve, though, sales of the company continued their year-on-year decline.

Since VIA Technologies’ primary business is chipsets, even if VIA CPU division sees some profits next year, this is not likely to bring the company’s overall profits up. Obviously, VIA should concentrate more on core-logic marketing to bring the firm out of the doldrums.