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VIA cuts 40% off profit prediction

PC market recovery not happening quickly enough

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VIA's profit this year will total less than two-thirds of what it had previously forecast, the chipset company admitted today.

Blaming the no-show of the recovery in the PC market that it had anticipated, VIA said it will earn some NT$5 billion ($145 million) this year - down 40 per cent on the NT$8.4 billion it forecast earlier this year that it would make. Earnings per share will fall from NT$8.80 to NT$5.30, the company said.

And VIA doesn't expect the market to improve any time soon. In an interview with Bloomberg, VIA's director of finance and accounting, Miller Chen, said: "The PC environment is not so good. It's not as strong as we predicted in the second quarter."

The bottom line is that VIA is selling fewer chipsets than it had anticipated it would. The events of 11 September and the broader economic climate may well have had an impact on demand for the company's products, but we'd also add Intel's legal action to the list.

Intel is suing VIA over the chipset maker's Pentium 4-oriented P4X266 part. Intel claims VIA has no right to use P4 bus technology in the chipset and has launched intellectual property violation lawsuits against it.

VIA has countersued, claiming Intel's behaviour is anti-competitive and citing alleged violations of its own patents.

Whatever the merits of its case, Intel's lawsuit has at least persuaded major motherboard manufacturers to steer clear of VIA's chipset. Instead, many are turning to SIS, which does have a P4 bus licence. SIS sources say it will ship 500,000 645 chipsets between mid-November at the end of the year, ensuring it will beat its previous target of 900,000 for the quarter by 50 per cent.

In response, VIA launched its own-brand motherboard line based on its own chipset. Last month, the company said these mobos would add NT$550 million to its November sales. Given Chen's comments today that seems unlikely to happen. And indeed, sources cited by DigiTimes suggest that it won't as VIA targets third-parties first and its own mobo division second. ®

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