Delta Electronics Inc (台達電), the nation’s top power supply unit maker, is expected to gain a foothold in Europe and Africa, aided by the newly announced acquisition of Norwegian telecom equipment power supply maker Eltek SAS, analysts said.
The 3.9 billion Norwegian krone (US$530.6 million) deal is the first acquisition case by Delta in more than a decade, but analysts expect more such deals are in the pipeline. Companies related to industrial automation, electric vehicles and data centers could be potential Delta targets, they said.
Due to Eltek having a high level of exposure in Europe, the Middle East and Africa (EMEA) and the US, JPMorgan analyst Gokul Hariharan said that this “is quite complementary to Delta’s exposure in telecom power [supply segment], which is predominantly Asia-focused,” according to a report released on Wednesday.
Eltek has generated 46 percent of its revenue from EMEA and 28 percent from the US, he said.
On top of that, the acquisition will help lift Delta’s ranking to the No. 1 in the telecom equipment power supply sector, seizing more than 20 percent market share, Hariharan said.
Hariharan expects the deal to boost Delta’s earnings per share after the transaction is completed in the middle of next year, with meaningful synergies to happen in the long term.
JPMorgan has retained its “overweight” rating on Delta with target price set at NT$220, implying a 38 percent upside from Delta’s closing price of NT$182 yesterday, which rose 2.82 percent from Wednesday.
UBS analyst Arthur Hsieh (謝宗文) said he agreed that the Eltek deal could help Delta expand its reach to EMEA and the US, but the contribution from the deal is likely limited, citing slow growth in the telecoms equipment power supply market.
Eltek said the overall telecom power market could see an average growth of 3 or 4 percent next year, while UBS’ global telecom equipment team estimates that capital spending in the telecom sector will contract by 6 percent next year, as 4G coverage spending could peak, Hsieh said in a report released on Wednesday.
Eltek’s telecom and data center power business contributed to about 89 percent of its overall revenue in the third quarter of this year, while the remaining 11 percent came from industrial applications, the report said.
However, Hsieh said that “Delta’s acquisition of Eltek is an optimal use of its cash position.”
As of the end of last quarter, Delta has a cash and cash equivalent balance of roughly NT$63 billion (US$2 billion).
UBS has a “neutral” rating on Delta, given slow growth across the company’s power supplies for PCs, game consoles and telecoms equipment segments, along with a target price of NT$188.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts