Fitch Ratings yesterday gave Quanta Computer Inc (廣達電腦) a stable outlook, given the world's largest contract notebook computer maker's solid business this year.
A Fitch report released yesterday assigned Quanta Computer a long-term foreign currency issuer default rating of "BB" and a national long-term rating of "BBB+(twn)."
"The ratings reflect Quanta's leading industry position in providing original design manufacturing [ODM] services for notebook computers and its solid customer relationships with the brandname notebook vendors," Fitch said.
The ratings also reflect the positive momentum of the electronics ODM sector, with more than 20 percent growth estimated for notebook computer shipments this year, it said.
The ratings are constrained by Quanta's concentrated business portfolio, low profit margin, negative free cash flow and above-average financial leverage, it said.
"Quanta is seeing greater pressure in its operating cash flow generation amid increasing competition in the ODM industry, while major branded notebook computer clients are also changing their outsourcing strategies to incorporate a larger number of ODM suppliers," Kevin Chang (
Despite business diversification efforts, material improvement in profitability and cash flow generation at Quanta seems unlikely to materialize in the next two years as low-margin notebook manufacturing would continue to account for more than 70 percent of revenues, Chang said.
Quanta is targeting raising non-notebook computer businesses -- especially high-end handsets and liquid-crystal-display televisions -- to account for 25 percent of total sales this year, up from last year's 19 percent, chairman Barry Lam (林百里) told reporters last Friday.
Quanta reported a 52 percent increase in sales last month to NT$50.27 billion (US$1.53 billion), from NT$33 billion a year earlier and NT$39.5 billion in December.
It shipped more than 2 million notebook computers last month. Shipments this year should hit 25 million units, up 30 percent from more than 19 million units last year, it said.
Quanta's unconsolidated revenues could exceed NT$500 billion this year, compared with NT$461.5 billion last year, Lam said.
Compal Electronics Inc (仁寶電腦), meanwhile, is aiming to unseat Quanta as the top laptop maker this year, with shipments to expand at least 37 percent to over 20 million units, president and CEO Ray Chen (陳瑞聰) said on Jan. 20.
Compal produced 14.6 million notebook computers last year, up nearly 50 percent from 2005. It reported an 82 percent increase in sales last month to NT$34.7 billion, from NT$19.1 billion a year ago.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
‘ONE-STOCK SHOW’: Turnover hit an all-time high as TSMC continued to determine the local market’s direction and surpassed Visa in market capitalization The TAIEX early yesterday hit an all-time intraday high on the back of soaring Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares, before tumbling back to the previous day’s close as the contract chipmaker could not single-handedly prop up the index. The TAIEX rose more than 400 points in the first 20 minutes of trading to hit a record 13,031.7 points, but later pared its gains to close down 0.01 percent at 12,586.73. Turnover was NT$343.252 billion (US$11.63 billion), the highest in the Taiwan Stock Exchange’s history. TSMC continued to dictate the market’s direction, as its early surge by the daily
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion
Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979. Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows. While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead. Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for