Asus, Gigabyte & Other Taiwanese Vendors Fighting Sales Declines Into 2019

A multitude of factors that originated in Q3 2018, including Intel’s 14nm CPU supply shortage, low demand from cryptocurrency miners, as well as the U.S.-China trade dispute, have negatively impacted Taiwanese motherboard and graphics cards vendors, and according to a DigiTimes report today, these factors will continue to affect the suppliers through the first half of 2019.

Revenue Declines for Motherboard, GPU Makers

DigiTimes' "industry sources" said that those aforementioned factors have led to increased inventories for Asus, Gigabyte and other motherboard and graphics card makers in Q3, pointing to disappointing revenues.

Q4 isn’t looking much better, as weak demand is expected due to fewer purchases in the DIY PC market, poor growth momentum in China and high price tags for Nvidia’s new GPUs.

“Gigabyte's annual motherboard shipments for 2018 are estimated to fall under 12 million units from 12.6 million posted in 2017, and its graphics card shipments for 2018 are forecast to drop to the 2016 level of 3.65 million units, down one million units from 2017," DigiTimes quoted industry sources as saying.

Reduced Profitability

Asus saw a 43 percent decline in profits in Q3 2018 to NT$3.34 billion (US$107.95 million) compared to the year prior. Gigabyte’s after-tax profits fell to NT$132 million (US$4.29 million) and an earnings per share (EPS) of NT$0.23 (US$0.01), which is the lowest the company has seen since 2008.

Things are about to get even worse in Q1 2019, especially for companies that tend to sell a higher ratio of graphics cards. Gigabyte and Tul are expected to see their profits cut in half in Q1 2019 compared to the same quarter last year.

Intel and Nvidia are also expected to increase the price of their chips to maintain profitability in the face of supply shortages and lower demand from consumers, DigiTimes said, adding that this will also lead to a decline in the motherboard and graphics cards makers’ profitability.

Tul saw an EPS loss of NT$1.34 (US$ 0.04) for Q3 2018, compared to a record EPS of NT$10.3 (US$0.33) for Q1 2018. The company still has an EPS of NT$8.25 (US$0.27) for the first three quarters of the year, mainly due to the strong performance in Q1 2018.

Lucian Armasu
Lucian Armasu is a Contributing Writer for Tom's Hardware US. He covers software news and the issues surrounding privacy and security.