Brookdale to quickly eclipse Rambus, Taiwan suppliers say

Brookdale to quickly eclipse Rambus, Taiwan suppliers say
TAIPEI, Taiwan — The availability of a Pentium 4 SDRAM chip set has Taiwan's main motherboard manufacturers predicting a quick changeover from Rambus-based systems by the end of the year. At that time they say SDRAM boards will represent the majority of their P4 motherboard shipments.

Intel Corp.'s 845 chip set for cheaper SDRAM-based computer systems is expected to inject a little verve into the sales of Taiwan's top motherboard makers next month. However, optimism over the new chip set triggering sales for P4 systems is being tempered by concerns over Intel's ability to provide stable supplies. Moreover, there is also some nagging worry about whether there will be enough Socket 478 CPUs on the market to ensure a smooth transition away from Rambus-oriented Socket 423 systems.

The Socket 478 boards will start to ship at the tail end of August from Taiwan and will be used with Intel's PC-133 Brookdale chip set. Brookdale will eventually work with double-data-rate DRAM as well and will face competition from products offered by Via Technologies, Acer Labs and Silicon Integrated Solutions. Those three Taiwanese manufacturers will release DDR chip sets in the second half.

The availability of Intel parts has been an intermittent problem in the past for motherboard makers in Taiwan, especially second-tier companies, and is sometimes given partial credit for Via's success in striking more deals for chip sets. But since top-tier motherboard makers have generally agreed to use Intel's SDRAM chip set first, they are hoping that Intel will be able to come through with deliveries.

"We don't know if they will have shipment problems or production problems. Intel always has some problems, according to our experience," said Iris Li, a product manager for Microstar International (MSI). "With the first shipment there probably won't be a problem, but we don't know if they can continuously ship them after first production."

If things go smoothly for Intel, motherboard manufacturers think that SDRAM-based boards will quickly comprise the bulk of their P4-based motherboard shipments in the fourth quarter. "In the channel market they will probably get 70 percent. If you add in the OEM market and system integrators, it's probably more," Li said.

Toward the end of the second half, Li said 20 to 30 percent of shipments at MSI will be P4 boards. The story is much the same at Asustek Computer Inc. and Gigabyte Technology Co. Ltd., with estimates of between 30 and 40 percent of total shipments being P4-based by the end of the fourth quarter.

At Intel, those sales will be a welcome change from the first half. In the beginning of the year, Intel tried to kindle sales of the P4 with aggressive pricing and rebates on Rambus memory. Nevertheless, P4 motherboard shipments at the major makers in Taiwan peaked out at around 10 percent in June and have jumped to about 15 percent now.

"But next month will be another story," said Peng Nie-yu, an executive at Gigabyte. Because of Brookdale and the Socket 478 Pentium 4, "about 80 percent of the P4 shipments will be SDRAM and 20 percent will be Rambus," he said.

At Asustek, which works more closely with Intel, executives also believe that Brookdale will quickly move the P4 into the mainstream and relegate the Rambus-based 850 chip set to a niche market. "These combinations will coexist in the market. But we see Socket 478 as being the mainstream because it supports SDRAM memory with decent performance," said Alan Chang, marketing manager at Asustek. "Intel's chip set pricing for the 845 and the 850 is very close. . . . So probably in the second half of next year, Intel will smoothly phase out the 850 until there is very limited supply in the market."

Chang estimates that Asustek's 845- and 850-based boards, which will both be four-layer pc boards, will fall into the $100 to $110 wholesale range. "The 850 motherboard's future will follow the pricing of RDRAM modules pretty closely. If Intel and the RDRAM vendors are committed and aggressively drop their price in the first quarter of next year, then it will occupy a larger part of the P4 market," he said.

The recent boost in sales at motherboard companies is also being attributed to stronger orders from the clone markets in Europe and from a few big orders in China. The mainland's largest computer maker, Legend Holdings Ltd., has doubled its orders to Gigabyte, from roughly 14,000 units per month to more than 30,000 units. Dell Computer Corp. also recently inked a deal with Asustek for 200,000 boards a month, most of which will be SDRAM-based P4 boards.

OEMs and major system integrators aren't expected to have problems getting supplies of the Socket 478 CPUs, but retail sellers of boxed CPUs are expected to be on the bottom of the totem pole because they represent a smaller portion of Intel's business. Because many of Taiwan's board makers have considerable exposure to the retail channel market, there is some apprehension over how attentive Intel will be to supplying that sector.

Motherboard makers are expected to be among the first top-tier electronics companies in Taiwan to benefit from the August rollout of Brookdale. Since June, sales have steadily risen, and that trend is expected to continue as Brookdale and seasonal factors spark demand. But even though big expectations are being heaped on the P4 for the second half, no one here seems to be saying a second-half rebound is in the works. PC watchers mostly agree that any boost in the P4 market simply means fewer P3s will be sold, leaving the PC pie roughly the same size.

Yet with the economy in Taiwan at a two-decade low, even small signs of an uptick in demand are carefully watched. "Everybody is basically holding their breath and crossing their fingers and hoping this [Brookdale launch] works, because we all need something to spur demand," said one Asustek manager.

Chris Hsieh, a semiconductor analyst at ING Barings, said that even though the P4 market will grow at the expense of the P3, "it still means that technology counts." People are still upgrading, he said, and that pace is expected to ratchet up in the fourth quarter once the Socket 478 Pentiums get a better hold on the market. Because the Socket 423 was only a temporary product, Hsieh thinks there will be a surge in sales when Intel ships the Socket 478 CPU, which is intended for a longer run on the market.