Intel's Payment to AMD Leaves Out Taiwan Rival
VIA could use all the help it can get. At the beginning of the decade, VIA was Taiwan's most successful chip-design company, with $1 billion in revenue and had over 40% of the global market for chipsets. That not only put VIA ahead of Intel, it made it the global leader. Eager to capitalize on the momentum, VIA President and CEO Wen-chi Chen had ambitious plans to challenge the U.S. company in its core business. "We would like to be No. 1 in microprocessors, too," he told BusinessWeek in a 2001 interview, adding: "That will be a while, a long while."
Since then, VIA has had a dismal ride. The company's share in microprocessors is barely a rounding error: According to market research group IDC, Intel has 81.1% of the market; AMD has 18.7%. And VIA? Just 0.2%. Sales last year were only $246 million, and the company posted a loss of $125 million.
new deals with dell and samsungVIA's Brown concedes the company has had a rough time. "It's obviously a very tough environment for us," he says, adding that unfair pressure from Intel is partly to blame. "We believe we have the right product, but sometimes the customer doesn't make a decision based on the attributes of the product."
He does say there's reason for optimism. For most of the decade the Taiwanese company has been focusing on designing microprocessors with low power consumption. With the growing popularity of netbooks and other light laptops, VIA is starting to gain some traction, says Brown. "For many years, Intel was preaching the megahertz story," he says. "But now the focus is more on mobility, portability, and low power."
Will that translate into a revival for VIA? Brown says there's been "no dramatic increase in sales so far," but he points to encouraging signs. This year the company has signed deals to provide microprocessors to Dell (DELL), Samsung, and Lenovo. VIA has also expanded sales to Hewlett-Packard (HPQ), which was already a customer. And Brown says VIA is working with Nvidia (NVDA) on a new chipset.
So far, though, investors aren't buying the turnaround story. VIA's stock price is down 3% this year, vs. a 67% rise for the benchmark Taiwan index.