Asustek and Gigabyte announce joint venture plan

Consolidation is continuing apace in the components market with Taiwan-based manufacturers Asustek and Gigabyte unveiling plans to establish a joint venture vehicle, which will produce Gigabyte-branded motherboards and graphics cards.

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By  Stuart Wilson Published  August 8, 2006

Consolidation is continuing apace in the components market with Taiwan-based manufacturers Asustek and Gigabyte unveiling plans to establish a joint venture vehicle, which will produce Gigabyte-branded motherboards and graphics cards. Until full details of the joint venture are revealed the channel implications remain murky. At present, Gigabyte has a strong distribution relationship with Golden Systems for its motherboard and graphics cards sales in the Middle East. The combination of Gigabyte’s existing channel strength with Asustek’s manufacturing prowess could pose a considerable challenge to rival vendors. The new company, which is expected to start operating at the beginning of 2007, will be 51% owned by Gigabyte and 49% owned by Asustek. Full details of the plans for the new operation will be revealed later this year. The new venture will be established with an initial capital of US$244m. The chairman, three directors and one supervisor on the board of the new joint venture will be appointed by Gigabyte with the remaining two spaces filled by Asustek appointments according to reports in the Taiwanese press. Asustek shifted some 52 million motherboards in 2005 and expects that figure to hit 60m for 2006. In contrast, Gigabyte produced just under 16 million units in 2005 and is estimated to reach 18 million motherboards for full year 2006. The economies of scale resulting from the joint venture — including its ability to leverage Asustek’s manufacturing muscle — are expected to allow Gigabyte to compete more aggressively against rival vendors such as MSI and ECS. The deal also extinguishes any aspirations that Foxconn may have harboured of taking control of Gigabyte.

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