Gigabyte/ASUS joint venture dumped: is Foxconn behind the whole thing?

Fox with a plan.

Gigabyte has pulled the plug on its unusual joint venture with ASUS, even though it seemed rather satisfied at the beginning of the cooperation.

The venture was slightly odd and out of this world, because they're continually at each other's throats with hate and that other thing. Competition.

The joint venture was a motherboard and video card firm called 'Gigabyte United,' the majority of which was controlled by Gigabyte, holding 51 percent of the shares, while ASUS held the remaining 49 percent. The firm began in January this year and lasted for a little over two months.

ASUS was happy to pour four billion New Taiwan dollars into the new firm. Gigabyte was no doubt happy about that, too, but that's now gone and Gigabyte now controls the entire firm.

Interestingly, even though ASUS is now out of the picture, it's apparently still quite keen to stick around with its cheque book should Gigabyte change its mind. Says Gigabyte, "a future partnership between GIGABYTE and ASUS hasn't been ruled out."

So why the sudden change of heart from Gigabyte? Well, officially, it keeps things fairly ambiguous, blaming "concerns from customers, suppliers, and vendors" and that evil 'evolving market' boogie monster.

At the time of the announced joint venture, it was suggested that this cooperation would help both ASUS and Gigabyte to compete with their common enemy -- the world's largest motherboard manufacturer by far, Foxconn.

Very few people are aware of the real reason all of this happened in the first place, however. Why did ASUS so readily splash money on Gigabyte?

Although supplying masses of motherboards to companies such as Intel, Dell, and HP, Foxconn doesn't have strong consumer awareness of its brand.

Of course, in its lucrative OEM markets -- which also include consoles, cell phones, and iPods -- this isn't necessary, but that doesn't mean it wouldn't want a strong consumer brand. And apparently it went shopping.

According to our reliable inside source in Taiwan, Foxconn offered Gigabyte some kind of tasty deal. Gigabyte then told its archrival, ASUS, who then decided it would be bad if its sole competitor were to end up sleeping with monster-corp, Foxconn.

So, ASUS basically paid up through this new firm. Of course, you won't ever hear that as the official reason.

With the joint venture, Gigabyte was laughing, having access to the ASUS cheque book. Let's just say recently meeting up with Gigabyte on ASUS's tab was a new thing for me.

Ultimately, if Gigabyte closes off such a venture that goes in its favour, there has to be a bloody good reason.

If what I'm told is true, Foxconn could well be planning a purchase of Gigabyte, which would surely be a brilliant move outside its OEM arena. And the two certainly are not strangers.

Gigabyte failed to provide official comment for this story.