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Despite Intel, AMD and Nvidia having all launched new processor or graphics chip products for the first quarter, motherboard players continue to suffer decreased shipments in the quarter and demand is also unlikely to pick up in the second, according to sources from the upstream supply chain.

Intel released several Kaby Lake-based processors and 200 series chipsets including the Z270 in January. AMD's 8-core Ryzen 7 1800X, 1700X and 1700 were launched in early March and Nvidia's GeForce GTX 1080 Ti also hit store shelves in March.

Intel also cut the prices for several of its previous-generation processors including Core i7-6950X and G328. Nvidia's GTX 1080 graphics cards also saw pricing drop from US$699 to US$499.

Because of weak graphics card demand especially from China, players have already started cutting prices for their GTX 1060 (starting US$249) and GTX 1070 (starting US$379) graphics card to stimulate demand.

Asustek Computer and Gigabyte Technology are expected to ship less than four million motherboards each in the first quarter, the lowest quarterly record in the past few years, while second- to third-tier players are expected to have even worse performances.

Although AMD has already prepared new Ryzen 5 series processors, Polaris-based RX500 series GPUs and next-generation Vega series GPUs for the second quarter, the sources believe these products are unlikely to have a significantly contribution overall because AMD only has a limited market share currently.

The sources pointed out that motherboard/graphics card players' overall shipments and revenues will see significant drops in the first half, but Asustek and Gigabyte are expected to see declines not as steep as the market's average thanks to demand from the gaming market.

But the sources expect demand from the PC DIY market to have a good chance to rise in the third quarter due to seasonality, as well as Intel's launch of its top-end Skylake-X and Kaby Lake-X processors and X299 chipsets, and AMD's release of its Ryzen 3 series processors for inexpensive mainstream sector and mass shipments of its Vega series GPUs, .

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Volatility ahead of key Washington healthcare vote

Newfound volatility and jitters ahead of a key healthcare vote in Washington have sapped enthusiasm for corporate bonds, forcing several companies to pay up to borrow through debt capital markets and sending others to the sidelines to await market calm.

Goldman Sachs and Santander were forced to offer more attractive new issue premiums to draw investors amid the subdued market conditions, as several recent bond offerings sold off on Wednesday. A raft of other companies, including Rockwell Collins, the US manufacturer of electronics for aircraft cockpits, decided against testing the market and delayed their debt sales, five investors and bankers familiar with the offerings said.

The rocky start to the week in corporate debt markets follows the largest sell-off in the S&P 500 this year on Tuesday, amid political wrangling in Washington over healthcare reform. The debate on healthcare has been viewed as a precursor and potential impediment to tax reform that is expected later this year and has been a key ingredient to the market’s rally since Donald Trump was elected in November.

“It’s not that you won’t get consensus around tax, but that it may get delayed or not happen at all if you cannot tackle healthcare reform,” said Raman Srivastava, deputy chief investment officer of Standish Mellon Asset Management. He added the market’s gain “hinges on seeing progress specifically on the tax side”.

Rockwell Collins, which held investor marketing calls on Monday and filed paperwork with US securities regulators to issue new debt last week, did not pull the trigger on a roughly $4bn bond sale on Wednesday due at least in part to the market sell-off at the start of the week, several people briefed on the deal said. The company will use the proceeds to fund its takeover of B/E Aerospace, the maker of aircraft cabin interiors. Rockwell Collins did not respond to request for comment.

“It’s difficult to price debt when you have this type of choppiness,” said Andrew Brenner, the head of international fixed income at National Alliance. Mr Brenner added the market tone was likely to continue until at least the end of Thursday, when a vote in the House of Representatives on the repeal and replacement of former president Barack Obama’s landmark healthcare legislation is expected.

Adding to the lacklustre market tone was a weakness in debt sold on Tuesday by Dutch bank ING and commodity trading house Glencore, with spreads on each widening. The premium investors demanded to own the 10-year ING bonds over benchmark Treasuries rose six basis points after the company confirmed on Wednesday it faced a criminal probe from Dutch authorities.

Six investment grade companies sold new debt on Wednesday, including Goldman Sachs, Santander, Ventas Realty and Kimco Realty — the latter are two real estate investment trusts that own senior housing facilities and open-air shopping centres, respectively — while one high-yield group completed a sale.

Goldman raised $2.5bn, including $1.75bn of notes that mature in 3.75 years (December 2020) with a yield 110 basis points above similarly dated Treasuries. The notes, which can be redeemed in 2.75 years, compare to the bank’s outstanding April 2020 debt that traded on Tuesday with a spread of 91 basis points, according to MarketAxess. Informa IGM, which tracks bond sales, pegged the concession closer to nine basis points when considering the bank’s four year outstanding debt.

Informa data put the average new issue concession for investment grade bond sales at nearly 5 basis points on Wednesday, up from less than 1bp on the preceding two days. Bankers underwriting the deals also had less success tightening borrowing terms as investors placed far smaller orders.

“You’re getting some concessions on the new issues [on Wednesday], and that’s not something you've seen in a few months,” said Ryan Jungk, a credit analyst with Newfleet Asset Management. “That can be a trap if the market undergoes a wider correction, but we don’t feel that is happening yet.”