Smartphone vendor HTC Corp (宏達電) is likely to see flat sales growth this month, after sales last month climbed to their highest level in 11 months, Citigroup said.
“We expect HTC shipments to peak in May, stay at a similar level in June and start to decline in July,” Citigroup Global Markets Inc analyst Kevin Chang (張凱偉) said in a note on Wednesday.
Chang’s forecast came after HTC on Tuesday reported its consolidated revenue for last month increased to NT$29 billion (US$969.4 million), up 48.03 percent from April, thanks to better-than-expected sales of its flagship HTC One smartphone.
“We estimate that HTC One accounted for around half of HTC’s May sales,” Chang said, adding that the company might have shipped around 1.2 million units of the phone last month, up 100 percent from April.
REVISION
Citigroup originally forecast HTC wouldship only 1 million HTC Ones last month before ramping it up further this month.
Chang said he revised his shipment forecast upward because HTC’s component yield rate had improved faster than expected, which in turn had enabled it to push some shipments to last month from this month.
However, “with One volume peaking and other models still weak, we believe May will be the peak of near-term sales,” he said in the note.
HTC may experience a similar scenario as last year, when sales also peaked in May and June, he added.
The Taoyuan-based company could also face headwinds from the generally slow market demand in the high-end smartphone segment, according to Citigroup.
Chang attributed the slow demand to a combination of saturation in developed markets and demand being delayed to next year as consumers wait for the launch of the big-screen iPhone.
EXPLANATIONS
“This is probably why iPhone shipments are still stable at around 30 million units per quarter despite the poor consumer feedback on iPhone 5 for its small screen,” Chang said. “We suspect this could be the reason HTC One is not doing particularly well despite other brands not doing so well either.”
Citigroup maintained a “sell” rating on HTC shares and a NT$205 target price. HTC shares fell 1.4 percent to NT$285 yesterday.
In a separate note on Tuesday, Morgan Stanley Taiwan Ltd said that HTC needs to conquer its structural issues to win more ground in the competitive smartphone market, despite the success of the HTC One.
It said that HTC’s sales upsurge last month was probably the result of wider distribution and improved component supply.
The market has already anticipated the robust sales, and HTC’s risks now lie in the sustainability of its sales into the third quarter, the brokerage said.
“While new HTC One feedback has been constructive, we are mindful of a few structural issues,” Morgan Stanley’s equity analyst Jasmine Lu (呂智穎) wrote.
First, HTC is not well-positioned in relation to the industry’s dynamic shift from developed markets to emerging markets, especially as its brand awareness in China is weaker than that of archrival Samsung Electronics Co, Lu said.
US MARKET
The Taiwanes/be firm’s market gains in the US are not enough to drive growth because of the deceleration of growth in the US market and a higher mix of prepaid smartphones in the US without operators’ subsidies, she added.
Moreover, HTC’s component sourcing strategy has been problematic, causing it to miss the best window of opportunity, despite having a well-received product, said Lu, who rated the stock “underweight,” with a target price of NT$199.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS