Feb. 02, 2001

The Market Intelligence Center (MIC) of Taiwan's Institute for Information Industry (II) said that Taiwan accounted for 101 million of 120 million motherboards shipped worldwide in 2000, giving the island approximately 84% share of the market. However, MIC predicts that local industry's growth will drop from 21% in 2000 , beating the world growth rate, to 13.1% in 2001, as the high market share hinders further expansion. Hit by market sluggishness since the second half of 2000, the industry is suffering from excess component inventory and declining capacity utilization.

In addition, the overseas production of Taiwan's motherboard firms is steadily rising - from 44% in 1999 and 48% in 2000to an expected greater than 50% for 2001.

Taiwan's overall success in motherboard production lies in increasing IEM orders from HP, Compaq, German-based Actebis, Fujitsu, and other leading global system integrators.

However,, affected by OEM client's demand for lower costs, leading manufacturers margins are eroding. The average shipping prices fell to US$ 73 in 2000 from US$ 85 In 1999, forcing margins down from above 20% to less than 15%.

Though leading motherboard manufacturers have aggressively expanded production capacity, many think current production is getting ahead of demand. Inventory turnover at distributors has increased from one month to four months due to slow PC sales. Additionally, over-optimistic forecasts led to overstocking of components, industry sources said.