2:36 am - Thursday December 14, 2017

Gigabyte motherboard shipments to fall under 13 million units in 2017

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Monica Chen, Taipei; Willis Ke, DIGITIMES

Gigabyte Technology is expected to see its motherboard shipments fall under 13 million units in 2017 from 16-17 million units in 2016, and could struggle to maintain the 10 million level in 2018, due largely to the dwindling desktop PC and DIY markets, particularly in China that commands almost half of the global market demand, according to industry sources.

In recent two years, both the desktop PC and DIY markets in China ceased their growth momentum, causing Taiwan’s top-5 motherboard suppliers to suffer significant sales declines. Among them, Asustek Computer managed to offset sales shrinkage in the sectors with its ROG-branded gaming motherboards bearing higher average selling prices (ASP) and gross margins, while Micro-Star International (MSI) also successfully built a firm presence in the medium to high-end gaming motherboards and graphics card markets. In contrast, Gigabyte’s AORUS-branded gaming products and graphics cards did not perform as well as their competitors, the sources said.

Industry observers said Gigabyte has failed to demonstrate outstanding operating strength and market competitiveness over the years, showing high reliance on motherboards to support its revenues and profitability. Despite its heavy investments in the notebook, tablet and mobile phone segments, the company has quit the unprofitable tablet and mobile phone businesses.

JV with Asustek tabled

Gigabyte scored quite good EPS at NT$7-8 (US$0.233-0.266) in 2000, the zenith of its motherboard business, but the EPS declined all the way to only NT$2 in 2005. This prompted the company to cooperate with its key rival Asustek to set up a 51:49 joint venture in August 2006, capitalized at NT$8 billion. But in late March 2007, both sides issued a public statement to indefinitely shelve the JV project, sending shock waves through the motherboard industry and seriously battering Gigabyte’s business operations.

But Gigabyte soon staged a comeback in the following years, with its annual motherboard shipments running close to 20 million units during 2013-2014, mainly bolstered by rapid sales expansion in the China market, enabling it to rival with Asustek as the world’s top-2 players in the motherboard arena.

The lingering sluggish global market demand and the gradual waning of growth momentum in China over the past two years, however, have combined to undermine Gigabyte’s overall strength in the motherboard sector. In addition, accustomed to fighting single-handedly, the company has also lagged behind Asustek and MSI in its share of the gaming and performance-oriented motherboard market, especially in Europe, industry observers said.

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