Taipei (Taiwan) - In an environment of increasing competitive pressure, two of Taiwan's Tier 1 motherboard manufacturers have decided to merge their businesses. Asustek and Gigabyte today announced a joint venture that will be developing, manufacturing and marketing motherboards and graphics cards under the Gigabyte brand.
The joint venture is planned to end up in a new company - so far without name - that will open its doors on 1 January of next year. Details about the new business have been scarce, but we do know that Gigabyte will hold 51% and Asustek the remaining 49% of the joint venture, which will funded with about $244 million initially. Gigabyte will appoint the chairman, three directors and one supervisor of the new board of directors.
The combination of Gigabyte's and Asustek's graphics cards and motherboards businesses is expected to not only reduce operating costs for the two firms but also make increase their competitiveness. In a market that has seen little growth and vanishing margins in recent times, especially ECS and Foxconn have been able to get lower component prices because of higher motherboard production volumes. The joint venture is seen as critical for Gigabyte, as it has been rumored for some time that Foxconn may have been interested in acquiring the company.
The Asustek and Gigabyte joint venture may only be the first of more prominent moves to consolidate motherboard operations. According to industry sources, manufacturers such as MSI could be forced to enter similar agreements soon.