Motherboard makers suffer inventory pile-up and limited growth in profits

Following slower growth in profits for Asustek Computer and Gigabyte Technology, sources in the Taiwan motherboard industry believe that the top-four leading motherboard makers - Asustek, Elitegroup Computer Systems (ECS), Gigabyte and Micro-Star International (MSI) - will see inventory pile-up from the beginning of this year, although low-margin OEM orders are set to increase due to price-cutting pressure in the clone market.

Combined motherboard shipments from the first-tier manufacturers are expected to experience a weaker-than-expected increase in the first half of 2006, the sources believe, noting that demand will slow when the companies’ inventories need to be eased, prior to the implementation of the Restriction of Hazardous Substances (RoHS) legislation in Europe, and also prior to a CPU platform transition and processor price reductions initiated by Intel and AMD.

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