"Several motherboard and graphics card makers saw serious overstock problems in the second half this year and started to cut prices several months ago in order to clear their inventory due to falling demand.

In addition to clearing inventory, makers have also cutback production capacity and reduced component purchasing, and have also started laying off personnel or have suspended hiring to prevent cash shortages.

First-tier makers Asustek Computer, Elitegroup Computer Systems (ECS), Gigabyte Technology and Micro-Star International (MSI) have already cut capacity and started inventory control measures.

Some second-tier makers are reportedly considering merging with other makers if performance in the next 3-6 months does not pick up. Some have also stopped production and are currently selling off inventory from the second and third quarters with no concrete schedule for restocking.

Jerry Shen, president of Asustek, pointed out that the PC industry is facing pressure and not many players can maintain high levels of growth. Asustek is putting more attention on inventory and purchasing volumes and will try to find some ways to save costs. However, the company currently does not have plans to reduce production of notebooks and netbooks, Shen added."