Chipset designer VIA Technologies Inc. of Taiwan has decided to enter the business of chipsets for DVD players and it has placed orders with Taiwan Semiconductor Manufacturing (TSMC) Co., Ltd. The chipset designer hopes to ship 3 million to 4 million DVD-player chipsets a month in the second quarter of 2002. The first type of the chipset the company will ship is an integrated-type device combining analog technology with digital technology. VIA has quoted the chip at less than US$10, a price sufficiently low to make it a threat to MediaTek Inc.'s equivalent chips. Taiwan-headquartered MediaTek is Taiwan's largest supplier of DVD-player chipsets.

Local industry specialists predict that the competition between VIA and MediaTek will ignite another round of competition between Taiwan's top two dedicated chip foundries -- TSMC and United Microelectronics Corp. They have farmed out most of their orders to the two foundry providers.

VIA executives said the company plans to roll out its DVD-player chipsets this April. The company has diversified into microprocessors, communications chips, network chips, motherboards, and the graphics chip business from computer chipsets. It plans to raise the weight of its non-computer chipset business to account for more than 50 percent of its revenue in two years.

VIA acquired many units of chipset testing equipment last year, especially equipment for testing DVD-player chipsets.

Although the company began supplying chipsets for CD-ROM players last April, shipment volumes have so far been insignificant because its products have not challenged those of MediaTek. Nevertheless, MediaTek came under pressure when VIA said it would enter the DVD-player chipset business, according to local industry experts.

Some local institutional investors note that VIA's DVD-player chipsets have been validated to similar levels of quality as MediaTek's, and will be sold at very competitive prices.