Demand for desktop PC motherboards "is falling off a cliff" as users put off purchases until the Windows Vista OS launches in January, claims investment banking firm Goldman Sachs.
Motherboard orders for the clone, or white-box desktop PC market has slid nearly 20 percent from its early October peak.
"Motherboard demand weakness is in line with our view that Vista has a negative impact on (fourth-quarter) motherboard demand, but it happened earlier and more significantly than we expected," says Henry King, executive director of technology research for Goldman Sachs (Asia) in Taipei.
In a report last week he also claimed a scarcity of low-cost Intel microprocessors and Advanced Micro Devices AM2 processors had contributed to the drop in demand, since it means there are fewer low-cost PCs on the market. Demand for low-cost PCs remains strong.
Rising user demand for laptop computers is also pushing demand for desktop motherboards down, he says.
As motherboards and other desktop PC components pile up at the end of October and in November, King believes companies will start a price war to clear their inventories.
The laptop PC sector is also facing some trouble. Strong user demand for laptop PCs is causing a shortage of components, King says.
At an investors conference last week, Acer executives say they expected to be able to procure only 95 percent of the components they need to sell laptop PCs in the fourth-quarter, which is the peak season due to year-end holidays.
"Since the second-half of August, we've seen demand rush in. We can't fill all our [laptop] orders," says Acer president Gianfranco Lanci at the investor conference. The world's fourth largest PC vendor expects a short supply of laptop batteries as well as microprocessors.
A massive recall of laptop batteries by major PC vendors such as Dell and Apple Computer has caused a shortage of batteries because it comes at the time of peak laptop demand for the year. The recall was due to defective Sony parts that can cause the batteries to overheat and possibly catch fire. Sony expects the recall to total around 9.6 million batteries.