A rally in Asian computer-related shares such as the Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) may have further to run on signs that business is improving after a slump of more than two years.
TSMC's shares have risen 32 percent in the last six weeks, Seoul-based Samsung Electronics Co has climbed 20 percent and Japan's Toshiba Corp is up 25 percent. They pared their gains today after mobile-phone supplier Motorola Inc cut sales estimates. Some investors, though, see signs that demand for computers and electronics is rebounding after chip sales had their worst decline in 2001 and barely rose last year.
"Conditions are still not great, but there is a hint that we are on the cusp of a turnaround," said Johnny Summers, who helps manage US$100 million at Jade Absolute Fund Managers in London, including shares of Quanta Computer Inc (
``This rally has some legs to it,'' he said.
A decline in SARS has helped spur the rally, with investors rushing to add shares of Asian computer-related companies. Last week's comments from Intel Corp chief financial officer Andy Bryant that sales of processors used in personal computers and servers are at the high end of what's normal for the quarter reinforced the optimism.
In the past, investors have turned upbeat about the technology industry only to see their expectations dashed.
Last year's weaker-than-expected holiday selling season punctured optimism built up in the middle of year.
Some investors aren't yet convinced it will be different this time.
"We're getting mixed signals," said Pedro Tai, who helps manage US$40 million at ABN Amro Asset Management in Taipei.
"We need to see more hard evidence," he said.
Still, Asia's computer-related shares have lagged the performance of rivals in the US, meaning they may yet have room to rally further, other investors said.
"There's a scramble to get positions in technology in Asia," said Richard Keery, who helps manage US$500 million in Asian stocks at Edinburgh Fund Managers in Scotland, including shares of TSMC.
"The drivers are in place," he said.
Shares of TSMC fell NT$1.50, or 2.5 percent, to NT$57.50 after US-based Motorola Inc, the world's No. 2 mobile-phone maker, said second-quarter sales will fall as low as US$6 billion from an April estimate of as much as US$6.6 billion, wiping out its forecast profit for the period.
It blamed the drop on SARS, which damped consumer demand.
Samsung Electronics, a maker of both computer chips and mobile phones, was unchanged in Seoul after earlier falling 1.45 percent. Toshiba declined 3 percent to ?387 in Tokyo.
Venture Corp of Singapore, which has climbed 17 percent in the past six weeks, fell 0.6 percent to S$16.40. Quanta climbed 2.1 percent to NT$74.5.
Underlining the tentative nature of the recovery, market researcher International Data Corp said global personal-computer shipments will rise 6.3 percent this year, lower than a March estimate for 6.9 percent growth.
It cited the outbreak of SARS and slowing orders from consumers in Asia and Europe.
The past pattern of rising expectations followed by disappointment may not be repeated this year because the quick end of the US war against Iraq removed a barrier that had prevented companies from buying computers and electronics, said George Wu (
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