Gigabyte and Asustek merging

Written by Luke    Tuesday, 08 August 2006 09:52

GIGABYTE Big news out of Taiwan today. Digitimes is reporting that Asustek and Gigabyte have agreed to form a joint venture. Future products, including motherboards and graphics cards, produced by the newly combined company will carry the Gigabyte brand. Gigabyte will have a 51% stake and Asustek will take the remaining 49%. The new operation is set to start operating in January of 2007. This merger will allow Gigabyte to lower production costs. Gigabyte also may be trying to avoid a potential takeover by Foxconn Electronics which has tried to negotiate a merger with Gigabyte several times in the past.

The Asustek-Gigabyte joint venture will be established with an initial capital of NT$8 billion (US$244 million), with 51% of the company being controlled by Gigabyte and 49% by Asustek. Under the agreement, the chairman of the joint venture will be appointed by Gigabyte, as well as three directors and one supervisor on the board of directors of the new company. The remaining two seats on the company's board will be assigned by Asustek, according to the companies.

What a year for mergers. First AMD and ATI and now Asus and Gigabyte. It may seem odd to DIY'ers why these two large companies would merge operations, but we often forget how much business their competitors get from OEM's. ECS, Foxconn, and the manufacturers lesser known to the enthusiast may not have much clout in the overclocking segment of the market but they have big presence in the OEM market. If Gigabyte and Asus have to merge to avoid floundering or being bought by someone who doesn't cater to the overclocker, then I'm all for the merger.