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The conflict of interests between own-brand and contract manufacturing businesses is not something new. Both brands and manufacturing assets become more and more valuable these days, hence, no surprise that companies try to ensure that nobody slowdowns their development.

MicroStar International, one of the world’s largest makers of mainboards and other components, said that it has faced a conflict between its own-brand and OEM businesses. The same kind of disagreements forced Asustek Computer to spin-off its contract manufacturing into a separate company and then essentially to sell off all manufacturing assets. However, MSI has no plans to follow the footsteps of its larger rival.

Henry Lu, vice president of MSI, said that OEM orders for notebook and graphics cards saw a serious drop in 2009 due to the concerns of customers about the rise of MSI's brand business, moreover, shipments are expected to drop further in 2010, reports DigiTimes web-site.

According to MSI, last year it shipped 18 million motherboards with 10 million own-brand products; 7 million graphics cards, including about 2.1 million of own-brand units; 2 million notebooks of which about 1.4 million were MSI-branded.

While the natural way to avoid the conflict of interest was to spin-off the manufacturing assets into a separate company, Mr. Lu reported said that MSI was unlikely to spin off its brand and OEM businesses within the next three years since the spin-off will not benefit to the company due to the limitations of economic scale. To counter the loss of the OEM orders, MSI will instead concentrate on aggressive promotion of MSI-branded products.

Tags: MSI, Business


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