Credit Suisse yesterday voiced optimism about the Asian technology sector for the remainder of this year and recommended that investors focus on Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Advanced Semiconductor Engineering Inc (ASE, 日月光半導體).
The Swiss investment bank attributed momentum in the second half to consumer demand and predicted that corporate demand would drive growth next year.
“Credit Suisse is positive on the Asian technology sector,” said Wu Chih-wei (吳志偉), chief executive officer of Credit Suisse’s Taiwan operations, at a tech forum in Taipei.
“Corporate spending, particularly for personal computer replacement, will see a strong rebound,” he said.
Corporate spending on technology in the US, for example, stood at the lowest level in almost 35 years, with tech capital expenditure as a percentage of GDP plunging to the 1995 level of 3.5 percent, while corporate PCs accounted for 59 percent of total PC units last year, Credit Suisse said in a statement.
Manish Nigam, head of non-Japan Asia Technology Research for Credit Suisse, told a press gathering yesterday that there is strong latent demand for PCs from companies because of a delayed PC replacement cycle and the availability of a substitute for the aging operating system next month.
These factors, together with substantial GDP in the US and a pick-up in industrial production in the coming quarters, underpin a corporate capital expenditure cycle, Nigam said.
“A corporate PC cycle is usually accompanied by a lift in networking and software spending and will have a multiplier effect on overall tech demand,” Nigam said. “Large-cap, broad-based Taiwanese tech names will benefit most from the trend.”
Randy Abrams, director and head of equity research in Taiwan for Credit Suisse, said TSMC and ASE are the top picks given their low inventory, improving demand and falling costs.
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