Microsoft’s acquisition of Nokia’s mobile phone business will have a neutral impact on Taiwan’s handset supply-chain firms in the short term, Yuanta Securities Corp (元大證券) said yesterday.
Companies in the supply chain include handset camera lens maker Largan Precision Co (大立光), metal casing manufacturer Catcher Technology Co (可成) and phone assembler Compal Communications Inc (華寶).
Given that most of Nokia’s handset components are sourced from Taiwanese suppliers, such as keypad makers Ichia Technology Inc (毅嘉) and Silitech Technology Corp (閎暉), as well as speaker supplier Merry Electronics Co (美律) and electronics connector maker Cheng Uei Precision Industry Co (正崴), Yuanta said the deal would not impact Taiwanese firms for the time being.
“The synergies of the acquisition remain to be seen,” Yuanta analysts led by Wang Deng-cheng (王登城) said in a note.
However, the buyout could pose negative for Taiwanese suppliers in the long term, in that both Microsoft and Nokia could maintain a certain level of inhouse production, according to Yuanta analysts.
“As Nokia has its own research and development team and manufacturing capacity, and Microsoft has also previously worked on hardware manufacturing analysis, we believe it is unlikely that Nokia will further outsource its handset manufacture business after the acquisition,” they wrote.
Nonetheless, based on Yuanta’s channel checks, local suppliers that have a close relationship with Microsoft and have the capability to manufacture handset components — such as camera module maker Chicony Electronics Co (群光) and metal and plastic casing supplier Ju Teng International Holdings Ltd (巨騰) — may now have the chance to penetrate Nokia’s supply chain.
Yuanta said Nokia might also produce and sell its own branded tablets running Microsoft’s operating system Windows as the company prefers to assemble products with its own in-house capacity. As such, the acquisition will have a more negative impact on PC brands and electronics manufacturing service providers in the long run, the brokerage said.