Mon, Sep 26, 2016 - Page 16 News List

Pegatron sees benefits in diversification

HEDGING ITS BETS:Chairman Tung Tzu-hsien said game consoles, tablets, notebooks and networking devices have been the main growth drivers for the company this year

By Lauly Li  /  Staff reporter

Pegatron Corp (和碩) hopes that its efforts to continue diversifying its product mix and client base will expand its operational scale, chairman Tung Tzu-hsien (童子賢) said.

This strategy would also allow the company to grow without relying too heavily on a single client or a few products, Tung said on Saturday on the sidelines of Acer Inc’s (宏碁) 40th anniversary celebrations in Taipei.

The latest sales data show Pegatron no longer needs to rely solely on smartphones to maintain growth momentum, he said.

“Our core competitiveness supported our sales last month expanding from [the same period] last year with no contribution from smartphone products,” Tung said.

New orders for game consoles, tablets, notebook computers and networking devices have been the main growth drivers this year, he said.

Pegatron, one of Apple Inc’s main smartphone assemblers, last month posted sales of NT$82.6 billion (US$2.64 billion), an increase of 9.02 percent from a year ago.

Cumulative sales in the first eight months of the year increased 1.78 percent annually to NT$646.53 billion, the company’s filing with the Taiwan Stock Exchange showed.

Pegatron’s product and client diversification efforts could also help improve the company’s utilization rate, especially during the slow season, and therefore help improve its margins, Macquarie Capital Ltd said on Aug. 11 in a research note.

Shipments and sales contributions from non-smartphone products should continue to grow for the rest of this year year, he said, citing order forecasts from clients.

Pegatron is one of the main suppliers for Sony Corp’s PlayStation game consoles and helps assemble Surface Pro series and Surface Book devices for Microsoft Corp.

Pegatron said its notebook shipments are expected to grow by between 5 percent and 10 percent this quarter from last quarter, with the non-computing product revenue to increase by between 25 percent and 30 percent.

The sales outlook for Apple’s iPhone 7 has been mixed since its launch on Sept. 16, but Tung said he is “cautiously optimistic” about the demand for the new phone by consumers worldwide.

Pegatron started to ship the new iPhones this month, he said without revealing shipment figures.

The recent recall of Samsung Electronics Co’s Galaxy Note 7 is unlikely to boost iPhone sales, because the two models are not in the same category in terms of handset specifications and price, he said.

The Galaxy Note series is only a small portion of Samsung’s total smartphone shipments, he said.

“Our US client’s new smartphones are competing against Samsung’s S7 series rather than the Note series,” he added.

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