Asustek Computer and Gigabyte Technology, two leading suppliers of computer hardware from Taiwan, have announced cancellation of the joint-venture between the two companies. It is believed that the companies decided to shelve the joint venture that would control over the largest part of the global mainboard market after emergence of internal opposition and outside pressure.

In August, 2006, Asus and Gigabyte agreed to form a joint-venture, which would produce mainboards and graphics cards under Gigabyte brand-name. Under the terms of the agreement, Gigabyte itself should cease production of mainboards and graphics cards, whereas Asus would continue to ship its products to the market. Gigabyte would control 51% of the newly-formed Gigabyte United company, while Asustek would have 49% stake in the joint-venture.

However, Asustek reportedly delayed to remit approximately NT$4 billion ($241.8 million, ?181.2 million) of investments into the company that started to operate on the 1st of January, 2007. In addition to Asustek's strange business behaviour, the new joint-venture also faced some other problems, which included internal opposition, pressure from clients who wanted to ensure consistent new products development by Gigabyte and possible violation of European antitrust laws.

As a result of the break up between the two companies, Gigabyte United will become a fully-owned subsidiary of Gigabyte Technology, which emphasized during a press conference that the computer hardware giant has no plans to sell of its mainboard/graphics cards division or find another partner for this business unit, reports China Economic News Service. Gigabyte earlier admitted that it used to be a target for acquisition by Foxconn Group, one of the world's largest producer of electronics.

Competition in the markets of mainboards, graphics cards and other equipment of this kind is very fierce these days and establishing a joint venture which would control over lion's share of the motherboards market might lessen price war between the players. But while there is a distinct trend towards merges between companies in those markets, channel players and other participants of the PC supply chain might not want to give Asus monopoly control over the market.

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