The nation’s technology sectors might see uneven business pickup in the second half of the year, as some companies might benefit from the launch of next-generation devices, while others remain vulnerable due to weak demand and lingering inventory adjustments, UBS Securities Pte Ltd said yesterday.
The Swiss brokerage briefed reporters on the sidelines of an annual forum that drew participation from local firms, as well as overseas investors.
“We see big players getting better and more critical as global semiconductor players accelerate into consolidation,” UBS semiconductor analyst Eric Chen (陳慧明) said.
The Internet of Things and data centers will supply the catalysts for the semiconductor industry’s high growth, Chen said.
Chinese semiconductor firms are moving into a high-growth phase, which poses both a threat and business opportunities for players in Taiwan, Chen said.
In general, local firms in Apple Inc’s supply chain might continue to benefit from the company’s next-generation handsets, Chen said.
However, inventory adjustments might persist next quarter for flat panels due to weak demand and oversupply, he said.
Chen said that TV demand next quarter is likely to be less than seasonal norms, with shipments flattish from this quarter, implying a decline of 5 to 10 percent from a year earlier.
As for hardware makers, UBS is looking at business improvement moving forward, although the pace might not be as fast as last year, he said.
The strong US dollar, which sapped demand in the first quarter, has shown signs of stabilization, encouraging distributors to restart business activity, UBS hardware analyst Arthur Hsieh (謝宗文) said.
Moreover, Microsoft Corp’s new operation system, Windows 10, might boost PC shipments next quarter, ending delayed purchases, Hsieh said.
Hsieh expects industrial PC makers to deliver sustainable earnings growth, given the increasing demand for factory automation, industrial control and payment systems, among other applications.
“The rise of big data and the IoT are the new drivers that can accelerate the growth of industrial PC companies,” he said.
For non-tech players, UBS expects online payment service users to increase significantly due to more convenient and value-added functions.
However, the brokerage held a conservative view on the machinery and components industry, as demand in the Chinese market is slowing, non-tech analyst Ally Chen (陳玟瑾) said.
UBS forecast GDP growth would slow from 3.7 percent last year to 3.3 percent this year, due in part to the falling price of exports, tech product rollover cycles and an economic slowdown in emerging markets, the brokerage’s Taipei-based equities and research head William Dong (董成康) said.
“While we still expect the market to rebound in the second half of 2015 with dividend yields — seasonal rise in tech shipments and the elections serving as catalysts — our conviction is now lower due to moderation of the fundamentals and weak local sentiment,” Dong said.
Dong said the government might provide more market-friendly policies ahead of the upcoming presidential and legislative elections in January next year.
However, retail investors appear less than enthusiastic, given the election’s uncertain outcome, he said.
“This might create short-term market volatility late into the fourth quarter of 2015 as the election date approaches,” Dong said.
Additional reporting by CNA
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