According to statistics of the ITIS project - a project initiated by Taiwan's Ministry of Economic Affairs and conducted by Taipei-based MIC - shipment volume of the worldwide motherboard industry is expected to reach 37.11 million units in the fourth quarter of 2008, representing sequential and year-on-year declines.
The worldwide motherboard industry's shipment volume reached 39.90 million units in the third quarter of 2008, increasing 14.2% compared to the previous quarter, but declining 2.0% compared to the same period last year. The third quarter is the traditional peak season, but peak-season demand was not strong. With large-scale shipments but without corresponding demand growth, inventory problems surfaced. Shipment volume in the first half of the year was unable to grow compared to the same period last year, despite a short-term flurry of demand in the first quarter. Therefore, many companies had high expectations for the traditional peak period in the third quarter of 2008. As many branded vendors and channel distributors increased their procurement, shipment volume of motherboard manufacturers was higher than in the first and second quarters.
However, demand in the third quarter was affected by the floundering economy and there was little growth momentum. The financial crisis in North America caused demand to fall drastically in that region. Even though the third quarter is the traditional peak season, growth momentum was weak, and overall shipment volume was even weaker than in the first quarter in North America. As for Western Europe, back-to-school demand emerged in September. The scale of this demand wave was much smaller than in previous years, and only created a one-month peak period.
In China, desktop PC and motherboard makers all expected that after the Olympic Games, previously postponed demand would emerge. But this peak season lasted only one month. Overall, although growth momentum in China and Asia-Pacific was stronger than in mature markets, momentum was considerably weaker than in previous years.
Inventory levels of many brands, channel distributors, motherboard brands and even motherboard manufacturers increased significantly in the third quarter. Furthermore, with the economy slowing down, the speed of inventory clearances in the fourth quarter is very slow. Branded vendors are using methods such as delaying order shipments from suppliers and demanding that suppliers shorten the time required for order adjustments, in order to increase flexibility and speed of their own inventory adjustments. For motherboard makers, however, the fourth quarter is expected to be a weak period.
An obvious effect of the financial crisis is the tightening of capital in the overall motherboard industry value chain. The financial crisis has caused the provider of capital ?the banking system ?to protect itself and tighten credit in the market. The effect on PC demand has been profound, in particular consumers in emerging markets. Much of demand in emerging markets relies on loans provided by banks. As a result, the main growth driver for desktop PCs ?emerging markets ?is starting to see a slowdown in demand. Meanwhile, distributors need capital to make procurements; the tightening of credit in the market causes distributors to be unable to make payments to suppliers, creating credit risks. The large European channel brand Maxdata faced a financial crisis as a result of this trend. This has forced relevant suppliers to stop shipments.
More information can be found in the following MIC report:
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About MIC
Market Intelligence Center, based in Taipei, Taiwan, was founded in 1987. MIC is Taiwan's premier IT industry research and consulting firm providing intelligence, in-depth analysis, and strategic consulting services on global IT product and technology trends, focusing on markets and industries in Asia-Pacific. MIC is part of the Institute for Information Industry. https://mic.iii.org.tw/english
About ITIS
The ITIS (Industry and Technology Intelligence Services) project is managed by the Department of Industrial Technology of Taiwan's Ministry of Economic Affairs. As part of the project, research is conducted in a variety of fields, including the ICT sector. The project serves both the public and private sector.