Intel dominates chipset market

New figures show that a bigger-than-expected drop in demand and a price war have left chipset makers hurting, while Intel has trumped the competition
Written by Matthew Broersma, Contributor

Intense competition in the market for chipsets -- the devices that connect PC processors to other components such as memory -- has helped bring computer prices down, but only at the expense of manufacturers' revenues, according to new figures.

In the meantime, the growing dominance of Intel's Pentium 4 processor has allowed Intel to turn the tables on its competitors in the chipset market, taking over nearly 60 percent market share in the second quarter. According to new figures from IDC, Intel shipped 59.6 percent of the chipsets on the market in the second quarter, up from 57 percent in the first quarter of this year.

At their peak in 2001, Taiwanese vendors such as Via Technologies, Silicon Integrated Systems (SIS) and Acer Labs (ALI) commanded about 60 percent of the market. Via, the second largest chipset maker behind Intel, claimed up to 48 percent market share last year. However, intellectual property disputes with Intel have made system manufacturers reluctant to buy Via's Pentium 4 chipsets, and Via had only 22 percent market share as of the second quarter of 2002.

Overall, the chipset market declined in the first half of 2002 amid demand that was more sluggish than expected, IDC said, so that all the players were competing for a smaller market. Intel and SIS grew largely at the expense of Via, a trend that IDC expects to continue.

SIS held 14.3 percent of the market in the second quarter, up 1.5 percent, but most of its share comes from the low-margin integrated products used in laptop computers.

The drop in demand and a chipset price war has led to a decline in revenue for all chipset makers, IDC said.

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