Second-Tier Mainboard Makers Hurt by Intel’s Microprocessor Launches – Claim

by Anton Shilov
12/28/2006 | 02:38 PM

Taiwan-based mainboard makers who belong to the so-called second-tier are hurt by Intel’s frequent launches of new microprocessors, as it requires them to develop products more and more quickly and this is something they cannot afford, according to a media report.

This year Intel Corp. introduced several new types of microprocessors (Intel Pentium D 900, Intel Pentium 4 600-series, Intel Core 2 Duo-series, Intel Core 2-series with four processing engines), each of which forced mainboard makers to adjust their designs or even develop new motherboards, which meant additional expenses on research and development. In addition, Intel brought several new core-logic models and two platform initiatives – Viiv and vPro – onto the market, which also required mainboard makers to ramp up their R&D efforts.

For larger mainboard makers, such as Asustek Computer, Elitegroup Computer Systems, Foxconn Electronics, Gigabyte Technology or Microstar International, which produce tens of millions mainboards a year, frequent introductions cause slight increases in the R&D expenses and oblige motherboard manufacturers to sell off existing products quicker.

For smaller makers frequent introductions of new chips and targeting of different mainboards towards different customers means much higher R&D expenses as a percentage of sales due to the fact that their output is much lower. Finally, high R&D funds affect pricing of final products and they become less competitive compared to similar motherboards from the first-tier producers, still, the second-tier manufacturers need to sell off products quicker despite of the pricing so not to find their stocks full of outdated products.

“To not lag behind Intel’s launches, they have to invest more in their product development, which will be a heavy burden for second-tier players,” an undisclosed industrial source is reported to have said in an interview with DigiTimes web-site. In addition to Intel's frequent product introductions, there will be similar moves from Advanced Micro Devices, causing even more issues with product development for smaller mainboard manufacturers.

But despite of the alarming sounds from Taiwan, there is nothing new in the fact that second-tier mainboard manufacturers have been under heavy fire for several years now, which caused serious reshuffling on the whole market. Since larger players have been gaining market share rather quickly, consolidations in the mainboard and computer components industries have been going for several years now just like re-focusing of several compaines. During the last 12 to 18 months Walton acquired a stake in Chaintech, Abit was bought by USI, Leadtek Research teamed up with Foxconn, Gigabyte formed joint-venture with Asus and several other deals were conducted.