Asus & Gigabyte Jv

[Pathik]

Two of the world's largest motherboard makers have announced plans to create a new company, and combine production of their desktop motherboard and graphics card products.

Asustek Computer, the world's biggest maker of computer motherboards, will take over the production of brand name motherboards and graphics cards for Giga-byte Technology. The two Taiwanese companies said the deal will enable them to reduce raw materials costs since they'll be able to buy components in bulk.

The new company is expected to start operations in January 2007.

The impact of this move could be the end of rapid price declines for desktop motherboards and graphics cards. That's a big difference from the past, when motherboard makers launched massive price wars against each other in order to gain market share. The price wars often cut into company profit margins, giving users bargain prices.

Vincent Chen, an analyst at CLSA Asia-Pacific Markets, said Asustek leads the branded PC motherboard market with a 33 percent share, and the joint venture with Giga-byte adds 13 percent, raising their combined market share to 46 percent. With a dominant position in the market, they should be able to stabilize prices, he said.

In a statement, Asustek and Giga-byte said they would invest a total of NT$8 billion ($243.7 million) in the new company. Giga-byte will own 51 percent of the joint venture, while Asustek will own the remaining portion.


Source

[montylee]

Looks like the season of buy-outs and takeovers has started.
Lets hope that the ultimate benefeciary is the consumer.