Investors in Asian electronics stocks don't envisage a strong enough pickup in demand for mobile phones and personal computers next year to restore earnings growth to levels of the 1990s.
Sales of cellphones and PCs may rise about a 10th this year, according to estimates from Nokia Oyj and researcher International Data Corp. Some investors are forecasting half that pace.
"We may have a 5 percent pop in PC and handset spending next year," said Mark Herskovitz, who counts shares in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world's biggest supplier of made-to-order chips, among the US$1 billion he manages for Dreyfus Corp. But "growth won't return to the earlier 20 percent rate."
The outlook for PC and handset sales is closely watched by companies in Asia such as Samsung Electronics Co and Sony Corp.
Stronger demand not only stokes sales of finished products such as flat-screen televisions and digital audio systems but it also fuels sales of components such as capacitors and digital signal processor chips, most of which come from Asia.
Asia's electronics makers have suffered one of their toughest periods ever as chip sales fell by a third in 2001, according to the Semiconductor Industry Association.
This year didn't mark much of an improvement, with sales probably rising just 1.4 percent, market researcher Dataquest Inc predicted earlier this month. Industry sales may rise 12 percent next year as chip demand expands, market researcher iSuppli Corp said two weeks ago.
The average rate of annual sales growth for PCs from 1996 to 2000 was 18.6 percent, according to IDC. Average annual sales growth for mobile phones in the same period was 58 percent, according to researcher Gartner Inc. Sales of PCs declined 4 percent and mobile phones fell by about 2 percent last year, the researchers said.
Mobile-phone sales will increase 9 percent next year, Gartner analyst Nick Ingelbrecht said. During 2003, handset vendors will introduce novel mass-market features such as color screens and embedded cameras, he said.
Global spending on electronics next year will be unchanged from this year because companies still lack the money or a compelling need to invest in new equipment, some analysts said.
"A rebound isn't going to happen [this] year," said Arthur Chai, an analyst with Morley Fund Management, which includes shares in Samsung and TSMC among the US$2.5 billion it invests in Asia. "Sales may increase by about 10 percent in 2004."
Nokia, the world's largest handset maker, earlier this month said the mobile-phone market will grow by about 10 percent next year. The PC market will grow by 8 percent, market researcher International Data Corp said.
Products with the strongest sales growth are now digital cameras and DVD players, which sell for a fraction of the prices of PCs and the latest mobile phones.
Computers and handsets, which account for more than half the electronics industry's sales, have struggled to attractive consumers in recent months.
In the three months to date, shares of Compal Electronics Inc (
TSMC shares have gained 5.1 percent, while Tokyo Electron Ltd, the world's second-largest supplier of chipmaking equipment, has risen 15.2 percent. Advantest, the world's biggest maker of equipment used to test computer-memory chips, has gained 12.5 percent.
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