Taiwanese smartphone vendor HTC Corp (宏達電) could consider a merger with Chinese mobile telecommunications equipment maker Huawei (華為) to survive in the competitive smartphone market, JPMorgan Securities (Asia Pacific) Ltd said yesterday.
“With a hero product [the new HTC One] unable to turn its prospects around, the other game changer could be a merger,” JP Morgan analyst Alvin Kwock (郭彥麟) said in a report.
Kwock said a combination of the expertise of Huawei and HTC could create huge synergies, especially for Taoyuan-based HTC, because it would lift HTC’s ranking in the smartphone market from the 13th-largest smartphone maker as of the last quarter to the fourth-largest with Huawei.
Photo: CNA
According to Gartner Inc, Huawei had grabbed nearly 3 percent of global smartphone market share by the end of the first quarter of the year as the world’s sixth-largest mobile phone brand, following Samsung Electronics Co’s 23.6 percent, Nokia Oyj’s 14.8 percent, Apple Inc’s 9 percent, LG Electronics Inc’s 3.7 percent and ZTE Corp’s (中興) 3.4 percent.
Holding less than 2 percent of market share, HTC has been struggling to make a comeback in the Android smartphone market after Samsung adopted aggressive marketing strategies and claimed nearly a quarter of global market share.
“Combining Huawei’s China expertise with a brand that has a superior product and consumer experience could boost future growth for the company by bringing complementary expertise in-house,” Kwock said.
As Huawei lacks a major consumer brand, but has a large home market, HTC might find it profitable to team up with Huawei because it has excellent products but lacks the right market with a strong demand for high-end smartphones, Kwock said.
Citing HTC’s second-quarter operating margin of 1.5 percent, which missed a consensus of between 2.5 percent and 3 percent by brokerages, Kwock said “there is very limited opportunity for HTC to match Samsung’s Galaxy S4 price cuts,” forecasting that the Taiwanese smartphone vendor, at best, would report flattish sales results for the current quarter.
“We like the new HTC One, but find it hard to find reasons to get involved with the stock as an investment at this time,” Kwock said.
JPMorgan reduced its rating for HTC’s shares to “underweight” from “overweight,” and cut its target price to NT$100 from NT$390 which the brokerage offered on April 13.
HTC’s shares closed down 1.03 percent at NT$191.5 in Taipei trading yesterday, underperforming the benchmark TAIEX market, which advanced 0.5 percent.
To boost sales during the second half of the year, HTC yesterday launched a red version of its new One flagship model with Taiwan’s third-largest telecoms operator, Far EasTone Telecommunications Co (遠傳電信).
“The new HTC One, with its three different colored metal casings, will become the most beautiful ‘mobile scenery’ in their daily life,” said Jack Tong (董俊良), president of the company’s North Asia-Pacific region.
Samsung cut the selling price for its flagship Galaxy S4 model by more than 20 percent within three months of the product’s launch in major markets like the US, the UK, India and Hong Kong, but HTC may not be able follow suit because there is limited room for the company to weather price drops with such a low quarterly operating margin, Kwock said.
He admitted that the brokerage had overestimated the One’s power for HTC to make a “mini-turnaround” in the short term after the model received widespread positive market reaction.
However, with Apple rumored to launch a larger-sized iPhone later this year and Samsung showing signs of rolling out a new Galaxy smartphone equipped with a flexible display next year, HTC may face more challenges ahead and not able to sustain its improving profitability momentum for too long, he added.
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
RSS