Poor motherboard and video card sales expected in 1H 2019

DigiTimes spoke to sources at Taiwanese suppliers of motherboards and video cards and got to hear things are looking bleak for the first half of 2019. Various factors including the bust of the cryptocurrency mining market, the US-China trade war, and the shortage of Intel processors is resulting in weak expectations for the first half of next year.

The article notes that ASUS, Gigabyte and other firms saw a sharp increase in inventory levels of motherboards and graphics cards in Q3 2018. This mirrors what NVIDIA told analysts during its earnings call last week. The GPU maker said there's so much mid-range GPU inventory in the channel that it's going to cease shipments of GeForce GTX 1060 GPUs for a full quarter to allow the channel to digest current inventory. This also means mid-range Turing-based cards are unlikely to hit the market anytime soon.

Revenue prospects for the fourth quarter are further dimmed by lingering sluggish demand from the DIY market, poor growth momentum in the China market and insignificant performance upgrades for Nvidia's new GPU platforms bearing relatively high price tags, the sources continued.

Makers of motherboards and graphic cars are expected to face tough challenges in the first quarter of 2019, when makers with higher graphic card shipment ratios, such as Gigabyte and TUL, may see their profitability halved on quarter due to high comparison bases of a year earlier. This, coupled with Nvidia and Intel likely to raise their chip prices to maintain profitability, may drive makers into a bleak profitability period starting in 2019.