The Greater Chinese motherboard industry’s shipment volume will post moderate year-on-year growth of 3.8% in the third quarter of 2002, but shipment value will slide 4.8% compared to the third quarter of 2001, according to the latest report from the Taiwan-based Market Intelligence Center (MIC).

Stronger than expected growth in the second quarter of 2002 will lead to a more moderate performance in the third quarter of the year. In the second quarter of 2002, Greater Chinese motherboards shipment volume totalled nearly 23.7 million units and shipment value topped US$1.5 billion, year-on-year increases of 16.1% and 9%, respectively.

A second reason for the decline in shipment value will be the huge drop off in ASP (Average Selling Price) from the third quarter of 2001 to the third quarter of 2002, a fall from US$70.40 to US$64.60.

In the second quarter of 2002, Intel effected a radical decline in chipset prices, which in turn caused a decrease in the price of motherboards. MIC Industry Analyst Stanley Su explains the reasons behind this strategy, “Intel had been overly optimistic that consumers would quickly switch to Pentium 4 processors and boost sales of its 845 and 845G series chipset. In addition, the company was aiming to increase its share in the chipset market.”

Another factor contributing the motherboard ASP slide in the second quarter of 2002 was the weakening of demand in the clone market, especially in Europe. Due to the ailing economy and the allure of the FIFA World Cup, European motherboard purchases fell off in the second quarter. As a result, Greater Chinese motherboard makers increased output of OEM products, which carry a lower price.

The percentage of Greater Chinese motherboard manufacturers’ output accounted for by OEM business continued to rise in the second quarter of 2002. Even makers such as Asus and Microstar, who traditionally focus on own branded production for the clone market, dedicated over 50% of production to filling OEM orders in the second quarter.

Also, Foxconn, which produces exclusively for OEM customers, continued to increase shipment volume in the second quarter of 2002, and broke into the Greater Chinese motherboard industry’s first tier.

Su notes, “As the world’s leading case and connector manufacturer, Foxconn is a vertically integrated motherboard maker which can provide OEM customers with the “one-stop-shopping” model they desire.”

For the entire year of 2002, MIC predicts the Greater Chinese motherboard industry will achieve a shipment volume of 107 million units, accounting for 92% of worldwide output.