SiS lands entry-level chipset orders from Intel, UMC may benefit

Intel may purchase entry-level chipsets from Silicon Integrated Systems (SiS) for its entry-level motherboards, sources cited by today’s Chinese-language Commercial Times indicated. SiS shareholder United Microelectronics Corporation (UMC) intends to assist SiS in meeting the demand by allocating capacity from three eight-inch fabs instead of the current one, the sources stated.

UMC declined to comment on the report, citing customer confidentiality. SiS also refused to comment. When asked if it has any plans to use chipsets from other vendors besides itself for its motherboards, Intel Taiwan declined to comment as well.

Intel may purchase entry-level chipsets from Silicon Integrated Systems (SiS) for its entry-level motherboards, sources cited by today’s Chinese-language Commercial Times indicated. SiS shareholder United Microelectronics Corporation (UMC) intends to assist SiS in meeting the demand by allocating capacity from three eight-inch fabs instead of the current one, the sources stated.

UMC declined to comment on the report, citing customer confidentiality. SiS also refused to comment. When asked if it has any plans to use chipsets from other vendors besides itself for its motherboards, Intel Taiwan declined to comment as well.

As the chip giant reportedly intends to end production of some of its entry-level 915- and 865-series chipsets in October, Intel my face a chipset shortage that may interrupt its own motherboard shipments, currently at about one million units per month, the paper noted. To cope with the shortage, Intel was in talks with SiS chairman John Hsuan, who is also a UMC vice president, about procurement of entry-level chipsets – mainly the SiS661FX – at a unit prices of about US$ 15, the paper indicated. Intel motherboards adopting SiS chipsets may hit the market as early as October, the paper added.

SiS may manage to ease its current tight supply with UMC supporting it with sufficient capacity allocation, sources indicated, adding that SiS was already expecting to face demand exceeding supply through the latter half of this year.

According to sources at Taiwan motherboard makers, the story run by the Commercial Times report supports the market belief that Intel plans to phase some entry-level chipsets. Though motherboard makers may face a chipset shortage, the negative situation will not likely last long and will benefit Taiwan-based chipset makers, the sources added

Intel’s decision to exit the entry-level chipset market is aimed to encourage motherboard makers to reduce their shipment proportion of entry-level motherboards and raise their adoption of chipsets including the Intel 915P/G and 945P/G series, motherboard makers commented.

With Intel’s purpose being to accelerate platform migration, the motherboard makers indicated that any relationship between SiS and Intel, or even UMC and Intel, would be short lived. However, by exiting the entry-level segment, Intel may prevent Taiwan chipset vendors from seeing their ASP (average selling price) drop further. The makers explained that Intel will focus on chipset priced above US$ 20 segment, SiS, VIA Technologies and ULi Electronics can compete in the under US$ 20 segment.

Currently, SiS’ customers for the Intel platform include EMS giant Foxconn Electronics (the registered trade name of Hon Hai Precision Industry) and first-tier motherboard makers Asustek Computer, Gigabyte Technology and Elitegroup Computer Systems (ECS). VIA mainly supplies Pentium 4-based chipsets to Micro-Star International (MSI) and Asustek wholly-owned subsidiary ASRock.

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