The sad fall of Taiwan’s Via Technologies picked up speed Dec. 19 when Bear Stearns dropped analyst coverage of the company. Once the top chip-design company in Taiwan and one of the world’s premier makers of chipsets for PCs, Via had ambitions of entering the major leagues by creating microprocessors that would compete directly with those of Intel and Advanced Micro Devices. Back in the late 1990s and early 2000s, Via was a headache for Intel, which charged the Taiwanese company with getting ahead by violating its intellectual property.
No doubt Intel execs are now smiling as things haven’t worked out so well for Via and its plans to enter the microprocessor business. It turns out there’s a very good reason Intel and AMD dominate the high end of the chip business: Making microprocessors (also known as central processing units, or CPUs) is no walk in the park, and convincing computers to switch to an unfamiliar alternative is even harder. Via’s stock price, which traded at 50 Taiwan dollars in mid-2003, is now at 17. This year alone, it has dropped 56%. Sales for the first 11 months of 2007 were down 31%, to $430 million.
Bear Stearns decided that Via no longer warranted coverage even though just a day earlier Via struck a deal with China Unicom to provide the Chinese state-owned cellular operator with CDMA chips. “Given the company’s uncertain growth prospects, investor interest in the stock has diminished substantially,” the Bear analysts wrote.
The big problem: “It is increasingly difficult for Via to compete with Intel in the chipset market, given Intel’s dominance in CPUs.” Via spokesman Richard Brown declined to respond directly to a question concerning Bear Stearns’ decision, but in an e-mail reply acknowledged that “we have undergone a challenging transition over the past few years from…