ASRock to cut into mid-range and high-end motherboard markets

Monica Chen, Taipei; Joseph Tsai, DIGITIMES [Monday 5 November 2007]

ASRock plans to cut into the mid-range and high-end motherboard markets because of the limited growth in the entry-level segment, according to Ted Hsu, CEO of ASRock, adding that in 2008, mid-range and high-end will account for around 35-40% of the company's total motherboard shipments.

With the entry-level CPU market shrinking to only 20% in 2007, if ASRock continues to focus only on the entry-level motherboard market, the company's profits will only continue to decline, Hsu pointed out.

Although ASRock will cut into mid-range and high-end markets, the company's relationship with Asustek Computer will not be directly impacted, Hsu claimed.

However, adjusting the proportion of motherboards does not mean shipments will decline, noted Sterling Wu, president of ASRock. Overall shipments will continue growing with the company focusing in the retail channel, while outsourcing to Hong Kong-based Fittec Electronics will help relieve factory operation costs during slow seasons. ASRock will also lower costs by joint ordering Asustek. In all, the company's ability to gain profit will not be weakened with the strategy change, Wu attested.

Although previous reports indicated ASRock was planning new product lines, Wu said the company currently has no such plans. Additionally, an earlier plan to enter the graphics cards market has been suspended due to fierce competition in the market.

Wu predicted ASRock's net income in the fourth quarter should have a 3-5% sequential growth and profits in 2007 will remain level with those in 2006. Motherboard shipments in 2008 will see an on-year growth between 10-15% compared to seven million units in 2007. Market sources estimated the company's EPS (earnings per share) should be between NT$22-24 (US$0.68-0.74) in 2008.

Ted Hsu, CEO of ASRock (left) and Sterling Wu, president of ASRock (right)
Photo: CJ Liu, Digitimes