14 DAY TRIAL // Asustek Computer has denied the intention to acquire MicroStar International. Earlier this year, Asustek was said to merge with Gigabyte with the intention of becoming more competitive but - in the end - they decided to form a joined venture.
Just like Asustek Computer, MicroStar International has strong brand presence in several market segments, including graphics cards, notebooks and mainboards motive for which it's understandable the idea of merging the two. However, despite of all the rumors related to a possible takeover, Asus has denied the idea.
Along with ECS, Gigabyte and MSI, Asus competes with system integrator Foxconn, a company involved only in contract manufacturing for large companies at first, but who has been penetrating the motherboards market recently. Competition between "the Big Four" and Foxconn is tough and there are moments that can change everything. For example, Gigabyte's Tim Handley admitted that Foxconn had proposed to acquire the firm, but the company has managed to avoid the take-over.
"The reason was simple. Like most Taiwanese companies, Foxconn business model was to simply manufacture motherboards in bulk to enjoy economies of scale. It did not have any need to market its brand or create its brand identity. But China has emerged as the mass producer for the world and this put Foxconn in a fix. It did not have a channel or go-to-market strategy," said Mr. Handley.
"So before Foxconn could take us over, Gigabyte decided to merge forces with Asustek and consolidate its position. Plus, Asus was competing with Foxconn on the OEM level. Therefore, this joining of forces has made Gigabyte stronger as a company. Also, we can now make cheaper motherboards, without compromising on the quality," said Mr. Handley regarding Foxconn's move.
Foxconn still has to penetrate large markets where companies like Asus, Msi or Gigabyte still hold an important quota. Merging may be the only option since these producers not only fight with Foxconn but also among themselves. Whether an actual merge might improve things is quite impossible to say.