Sat, Feb 08, 2003 - Page 10 News List

AMD processor delay may hurt VIA

VULNERABILITY VIA is downplaying the impact of the postponement on its sales, but some analysts disagree

By Bill Heaney  /  STAFF REPORTER

A delay in the release of a new computer processor by US-based Advanced Micro Devices Inc (AMD) will have a downstream impact on local chipset designers, analysts said yesterday.

The biggest loser is expected to be VIA Technologies Inc (威盛電子) which relies on AMD for up to half its sales. The new "K8" processor was slated for release next month, but AMD recently announced that the launch would be delayed until September.

"Obviously the news is a little disappointing," Richard Brown, an associate vice-president at VIA, said yesterday.

Brown played down the impact of the delay, saying he expected AMD's existing processor, the K7 or Athlon, to do well this year.

Unwilling to put an exact figure on how VIA's sales would be affected, analysts said yesterday they expected the impact to be significant.

"The delay will certainly have a negative impact on VIA," said Sharon Su (蘇豔雪), chief researcher at UBS Warburg in Taipei.

Without the new processor, AMD will not have an equivalent product to compete with Intel's newest product rival.

AMD's share of the global processor market slipped last year from 17 percent to 13 percent, according to chip analysts Mercury Research. Intel controls more than 80 percent of the market.

The processor, or brains of a computer, uses a chipset to communicate with other parts of the computer, such as the memory.

With VIA supplying seven out of every 10 chipsets for AMD processors worldwide, the company is vulnerable to any decline in AMD's sales, Su said.

Others agree.

"VIA is heavily weighted towards AMD, so the delay of this product launch will have an effect," said John Leong, a chip-industry analyst at Deutsche Bank in Taipei.

Leong estimates that AMD chipsets account for between 40 and 50 percent of VIA's total sales.

The timing of the delay during the traditional slow season may lessen its eventual impact on both AMD and VIA.

"The second quarter of the year is the weakest time of the year for chipset sales, so as long as AMD can introduce the new processor in volume in the second half of the year, there should be little impact," Leong said.

Any delay into the fourth quarter would have a much greater impact, he said.

The chipset industry has consolidated in recent years into three major players -- Intel Corp, Silicon Integrated Systems Corp (SiS, 矽統科技) and VIA. Last year, Intel led the market with around 60 percent of chipset sales, followed by VIA and SiS with around 20 percent each. In recent months, SiS has been gaining ground on VIA due to an alliance with chipmaker United Microelectronics Corp (UMC, 聯電).

Shrinking profit margins and increased competition have pushed VIA to diversify.

"We believe that increasingly the trend is not to deliver a single component for a computer system, but to deliver a whole platform," Brown said.

Last year VIA launched a series of low-cost mini-PCs that are now available from Wal-Mart Stores Inc in the US for US$199.

Brown conceded that sales of these new products had been slow to take off, but he expected to see large shipments by the fourth quarter of this year.

He was bearish on the prospects for growth in the global PC market this year in general.

"Assuming there is no war in Iraq, there will still be no rapid growth this year," he said.

He warned other companies not to rely on corporate computer replacements to stimulate the market this year.

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