10.16.2001
VIA announces new VPSD division

• In reaction to potential chipset market share loss from a P4 licensing dispute with Intel, VIA announced that it will enter the motherboard (MB) business by establishing a Platform Solutions Division (VPSD). VPSD will focus on R&D, design, and marketing of MB and will outsource production. Current products are restricted to Intel’s P4 Socket 478 MB adopting P4X266. While we remain cautious on 4Q results due to uncertainty associated with end market demand for VIA brand MB, we remain skeptical on the potential for success of the VPSD strategy based on three reasons: (1) VIA has little existing expertise in MB R&D which, in the long run, will demand substantial financial resources to build and maintain; (2) problems with clone market adoption of a new brand; and (3) channel conflicts with MB customers that currently account for the majority of VIA’s revenue.