Original article from the Commercial Times(2004.04.29)
New Intel platform to benefit Hon Hai
New chipset to use Hon Hai’s LGA775 connector, worldwide volume of six million units expected in third quarter
Joyce (Wen-chi) Kuang in Taipei
Note: Originally published in Chinese on page 13 of the April 29, 2004 edition of the Commercial Times, in the “Production and Marketing of the High-tech Industry” section. Article translated into English and used with permission. Hon Hai Precision Industry trades under the registered name of Foxconn Electronics in many countries. Hon Hai is a transliteration of the company’s Chinese name.
Intel’s biggest desktop PC platform renewal in recent years will be kicked off this quarter with the launch of the Grantsdale and Alderwood chipsets. To cater for the new generation Prescott processor, the CPU connector will also change from the present PGA478 to the new LGA775. Motherboard makers have recently reported that due to technical issues, almost everyone will initially have to use Hon Hai’s connectors. Because the unit price is relatively high, it is expected that when Intel launches the new platform, it will contribute much to Hon Hai’s profits.
Motherboard makers said the current average quote price for Hon Hai’s LGA775 connector exceeds US$7. The price is even higher than the launch price of the PGA478. When the PGA478 was launched, Hon Hai enjoyed a golden period of profits. Currently, quotes for PGA478 connectors have dropped to US$1-2. In comparison, the new connectors will be more than twice as expensive.
According to preliminary estimates in the motherboard sector, 20% of third quarter shipments are expected to use the 775 platform because the top four motherboard makers will not only use the LGA775 connector for the new chipsets, but they will also introduce LGA775 connectors with existing chipsets in order to support the latest Prescott processor. With a combined 10 million motherboards expected to be shipped each month, at least six million LGA775 boards are expected to be shipped in the quarter. With a margin estimated to exceed 50%, the potential contribution to Hon Hai’s profits is clear.
First-tier makers indicate that the technology for the new connector is quite a big change from the past. In order to ensure quality and maintain shipment volumes, the makers at first will rely quite heavily on Hon Hai products. Compared to traditional connectors, the LGA775 is metal and it consists of many pins, rather than densely distributed holes. The increased number of connections improves electrical performance. However, the production cost for the connectors will increase.
Currently motherboard makers have contacted Intel, hoping that the company will certify more connector makers in order to encourage cost reductions. According to sources, Tyco-AMP is ready to begin shipments. As to whether there will be a repeat of last year’s scenario when connectors were in short supply, makers think the chances are slim, because demand for new platform immediately after launch is not expected to be particularly high.
Another issue deserving attention is that the exposed pins of the LGA775 connectors will need to be protected with a cover during shipment. Makers may also have to face increased demand for after-sales service when consumers attempt to plug in CPUs in the wrong direction, causing damage to the pins or other problems. Any increased costs caused by these issues will need to be shouldered by the motherboard makers. At that time, vendors may have a headache trying to determine who should take the blame, the motherboard makers, Hon Hai or Intel.
New chipset to use Hon Hai’s LGA775 connector, worldwide volume of six million units expected in third quarter
Joyce (Wen-chi) Kuang in Taipei
Note: Originally published in Chinese on page 13 of the April 29, 2004 edition of the Commercial Times, in the “Production and Marketing of the High-tech Industry” section. Article translated into English and used with permission. Hon Hai Precision Industry trades under the registered name of Foxconn Electronics in many countries. Hon Hai is a transliteration of the company’s Chinese name.
Intel’s biggest desktop PC platform renewal in recent years will be kicked off this quarter with the launch of the Grantsdale and Alderwood chipsets. To cater for the new generation Prescott processor, the CPU connector will also change from the present PGA478 to the new LGA775. Motherboard makers have recently reported that due to technical issues, almost everyone will initially have to use Hon Hai’s connectors. Because the unit price is relatively high, it is expected that when Intel launches the new platform, it will contribute much to Hon Hai’s profits.
Motherboard makers said the current average quote price for Hon Hai’s LGA775 connector exceeds US$7. The price is even higher than the launch price of the PGA478. When the PGA478 was launched, Hon Hai enjoyed a golden period of profits. Currently, quotes for PGA478 connectors have dropped to US$1-2. In comparison, the new connectors will be more than twice as expensive.
According to preliminary estimates in the motherboard sector, 20% of third quarter shipments are expected to use the 775 platform because the top four motherboard makers will not only use the LGA775 connector for the new chipsets, but they will also introduce LGA775 connectors with existing chipsets in order to support the latest Prescott processor. With a combined 10 million motherboards expected to be shipped each month, at least six million LGA775 boards are expected to be shipped in the quarter. With a margin estimated to exceed 50%, the potential contribution to Hon Hai’s profits is clear.
First-tier makers indicate that the technology for the new connector is quite a big change from the past. In order to ensure quality and maintain shipment volumes, the makers at first will rely quite heavily on Hon Hai products. Compared to traditional connectors, the LGA775 is metal and it consists of many pins, rather than densely distributed holes. The increased number of connections improves electrical performance. However, the production cost for the connectors will increase.
Currently motherboard makers have contacted Intel, hoping that the company will certify more connector makers in order to encourage cost reductions. According to sources, Tyco-AMP is ready to begin shipments. As to whether there will be a repeat of last year’s scenario when connectors were in short supply, makers think the chances are slim, because demand for new platform immediately after launch is not expected to be particularly high.
Another issue deserving attention is that the exposed pins of the LGA775 connectors will need to be protected with a cover during shipment. Makers may also have to face increased demand for after-sales service when consumers attempt to plug in CPUs in the wrong direction, causing damage to the pins or other problems. Any increased costs caused by these issues will need to be shouldered by the motherboard makers. At that time, vendors may have a headache trying to determine who should take the blame, the motherboard makers, Hon Hai or Intel.
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