10.24.2001
MB strategy implies a change in business model

• It is reported that VIA MB shipments will reach 200k in November. The company further stated it will continue to ramp shipment to 1m units by mid-2002, which means revenue from MB would exceed that from chipsets. We reiterate our cautious stance on this aggressive MB strategy and change in business model on three counts: (1) The strategy may prompt Intel to further retaliate and lock VIA out of the P4 club in 2002; (2) The 1m-volume shipment is almost equal to that of a first-tier MB player’s shipments, indicating that the strategy could impede or challenge existing MB makers; and (3) Company will need to swiftly adjust corporate strategy to the new business model, as MB business has vastly different requirements on various measures. We believe VIA has become a very leveraged play, leaving it exposed to additional risks.