Analysts are predicting a 10 percent dropoff for Taiwanese manufacturers as Chinese shoppers stay home and trade shows are canceled

Taiwanese motherboard manufacturers may see sales fall by at least 10 percent this quarter after the spread of severe acute respiratory syndrome (SARS) hit the lucrative Chinese market, industry experts said yesterday.

China, with the world's fastest growing demand for computers, accounts for between 10 and 30 percent of motherboard sales at each of the four companies -- Asustek, Elitegroup , Micro-Star and Gigabyte Technology.

"Second quarter demand from China is weak and we expect a 10 percent drop in motherboard sales," said William Fong an analyst at Primasia Securities Co in Taipei.

Citing nervous shoppers staying at home and a dramatic drop in business trips, Fong said Chinese computer buyers are putting their orders on hold. Four Taiwanese companies supply around 90 percent of the world's motherboards, according to the government-funded Market Intelligence Center.

Over at Elitegroup, which sells up to 300,000 motherboards to China every month, the effect of SARS is already being felt.

"The impact is there," said Mike Chou, senior vice president at Elitegroup.

"The drop this quarter will be maybe 10 percent, maybe more," he said.

With no decrease in new infections in China, Chou expected the slowdown to be drawn out.

Other companies are trying to play down the impact of SARS.

"The percentage of Asustek sales to China is much less than say Gigabyte," said product manager Joe Hsieh.

"Our feeling is that the effect of SARS overall in Asia is not that pronounced," Hsieh said.

Asustek's sales to Hong Kong have seen a drop, Hsieh said, but it was also too early to judge whether SARS is responsible for the drop, he said.

"To present we have not seen any impact on our sales," Micro-star spokeswoman Hong Pao-yu said.

"The second quarter is normally the low season, so a drop in sales is to be expected," Hong said.

Another analyst accepted the low season argument, but said that canceled orders as a result of SARS would be added on top of that.

"A drop of 10 to 15 percent in sales is normal in the second quarter low season," said Wang Wan-li, a motherboard analyst at Credit Suisse First Boston in Taipei.

"The added SARS effect will create an extra drop of 5 percent, so we can expect motherboard sales to be down 20 percent," Wang said.

The cancellation of all trade shows in China because of SARS fears has dealt the biggest blow to motherboard sales there as buyers from all over the country attend exhibitions in larger cities and take their orders back to the far reaches of the country.

By: DocMemory
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