Taiwanese technology firms are unlikely to experience the normal seasonal boost in sales in the second half of the year as the poor global economy slows corporate replacement demand, while consumers await the arrival of Microsoft’s new operating system, UBS Taiwan said yesterday.
The conservative assessment came after the local unit of the Switzerland-based financial services provider concluded two days of investor conferences that drew more than 350 participants.
Many investors appear to be placing hopes on the upcoming launch of the iPhone 5, Windows 8 and light-weight laptops to provide a boost to shipments and profit margins in the second half of the year, William Dong (董成康), head of UBS Taiwan equities and research, told a media briefing.
“For those hopes to turn into reality, pricing has to be low enough to stimulate demand and costs have to fall to improve margins,” Dong said. “While not out of reach, this certainly has its set of challenges.”
Dong recently revised downward UBS Taiwan’s year-end forecast for the TAIEX to 7,650 points, from 8,000 estimated last month, after Europe’s debt problems and unfavorable policy plans sidelined investors.
The benchmark index closed down 0.40 percent at 7,137.93 yesterday, up 0.93 percent so far this year, Taiwan Stock Exchange data showed.
Arthur Hsieh (謝宗文), UBS electronics hardware lead analyst, expects sub-seasonal shipments for the PC supply chain, despite all the hype about devices using Windows 8 and encouraging comments from Intel Corp and Microsoft Corp during this year’s Computex trade show in Taipei.
“More firms may revise down revenue forecasts” after Compal Electronics Inc (仁寶電腦) and Wistron Corp (緯創), Taiwan’s second and third-largest contract notebook computer assemblers, trimmed targets last week, Hsieh said.
The pressure for downward revisions also weigh on brand names such as Acer Inc (宏碁) and Asustek Computer Inc (華碩), the world’s No. 4 and No. 5 PC brands, Hsieh said.
Acer chairman J.T. Wang (王振堂) recently said he expected Ultrabooks to account for between 12 percent and 15 percent of total notebook shipments this year, lower than the 20 percent previously estimated.
Past expectations of a 12 percent increase in the third quarter may prove overly optimistic, Hsieh said, adding that Microsoft’s unveiling of its Surface tablets has added a new uncertainty to the overall PC hardware landscape.
While pricing remains unclear, Microsoft can price Surface tablets competitively because they do not need to pay royalty fees for its operation system as other contract makers do, Hsieh said.
Jonah Cheng (程正樺), UBS semiconductor head analyst, said oversupply may haunt foundries as well as packaging and testing processors, most of which have significantly increased their capital expenditure this year.
“The risk of capacity redundancy may rise if there is no corresponding end-market demand,” Cheng said
The sales momentum for end-products has been weak this year except for low-price smartphones in China, he said.