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.
SECOND-RATE: Models distilled from US products do not perform the same as the original and undo measures that ensure the systems are neutral, the US’ cable said The US Department of State has ordered a global push to bring attention to what it said are widespread efforts by Chinese companies, including artificial intelligence (AI) start-up DeepSeek (深度求索), to steal intellectual property from US AI labs, according to a diplomatic cable. The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about “concerns over adversaries’ extraction and distillation of US AI models.” Distillation is the process of training smaller AI models using output from larger, more expensive ones to lower the costs of training a powerful new
Micron Technology Inc is a driving force pushing the US Congress to pass legislation that would put new export restrictions on equipment its Chinese competitors use to make their chips, according to people familiar with the matter. A US House of Representatives panel yesterday was to vote on the “MATCH Act,” a bill designed to close gaps in restrictions on chipmaking equipment. It would also pressure foreign companies that sell equipment to Chinese chipmaking facilities to align with export curbs on US companies like Lam Research Corp and Applied Materials Inc. The bill targets facilities operated by China’s ChangXin Memory Technologies Inc
Singapore-based ride-hailing and delivery giant Grab Holdings’ planned acquisition of Foodpanda’s Taiwan operations has yet to enter the formal review stage, as regulators await supplementary documents, the Fair Trade Commission (FTC) said yesterday. Acting FTC Chairman Chen Chih-min (陳志民) told the legislature’s Economics Committee that although Grab submitted its application on March 27, the case has not been officially accepted because required materials remain incomplete. Once the filing is finalized, the FTC would launch a formal probe into the deal, focusing on issues such as cross-shareholding and potential restrictions on market competition, Chen told lawmakers. Grab last month announced that it would acquire
The artificial intelligence (AI) boom has triggered a seismic reshuffling of global equity markets, with Taiwan and South Korea muscling past European nations one by one. With its stock market now valued at nearly US$4.3 trillion, Taiwan surpassed the UK, Europe’s biggest market, earlier this month, data compiled by Bloomberg showed. South Korea is about US$140 billion away from doing the same. The tech-heavy Asian markets have shot past Germany and France in the past seven months. The shift is largely down to massive gains in shares of three companies that provide essential hardware for AI: Taiwan Semiconductor Manufacturing Co (TSMC, 台積電),
RSS