Original URL: http://www.theregister.co.uk/2005/09/02/chipset_price_rises/

Chipset makers 'to raise prices' in Q3

But higher oil prices could hit them hard in Q4

By Tony Smith

Posted in Financial News, 2nd September 2005 11:01 GMT

Chipset prices look set to rise during the quarter, Taiwanese industry sources warn, with an inevitable knock-on effect on motherboard prices.

Demand is outstripping supply, it seems, as Intel's low-end chipset production is cut, forcing buyers to turn to rival suppliers SiS, VIA, ATI and Nvidia.

That, said the sources - cited by DigiTimes - has already persuaded SiS to put up chipset prices by 10-15 per cent.

The other three companies are expected to follow suit, raising chipset prices by around ten per cent, the sources alleged.

The upshot will be improved Q3 financial results. Said sources reckon SiS and VIA will each ship around 7.8m chipsets in the third quarter, up 30 per cent on Q2's 6m. ATI's shipments are expected to jump 150 per cent, from around 2m in Q2 to 5m in Q3, largely on the back of its RC410 integrated chipset, which targets Intel processors. Since ATI bundles its North Bridge parts with ULi South Bridge chips, the latter company is expected to see Q3 shipments rise handsomely too.

Beyond Q3, the picture is more murky, thanks to the effects of Hurricane Katrina. This week, the US Semiconductor Industry Association (SIA) warned that rising oil prices could hit the chip industry hard.

The already-inflating crude price has risen on the back of the disaster's impact on US oil and gasoline production. That's already pushing up gas prices in the US, which is expected to have a impact elsewhere. The likely result is weaker consumer spending in the coming months. Chip makers' customers may well find themselves over-supplied in Q4 and Q2 2006, or demanding lower prices in order to price their own products to levels consumers are willing to meet. ®