Thu, Feb 16, 2017 - Page 12 News List

Asus to delay launch of flagship handset

BOTTLENECK:A shortage of components, including DRAM, flash memory and flat panels, used in notebooks and smartphones is slowing production, Asustek said

By Lauly Li  /  Staff reporter

Asustek Computer Inc (華碩) has delayed its annual launch of a flagship smartphone from April to July at the latest, mainly due to a quarter-long shortage in key components, company executives said yesterday.

Persisting supply constraints on key components and volatility in foreign currency exchange rates would be the two main challenges for Asustek this year, company chief executive officer Jerry Shen (沈振來) told an investors’ conference at the company’s headquarters in Taipei.

The company in November last year told reporters that it hoped to launch its next-generation ZenFone in April this year at the earliest, in an effort to maintain sales momentum, as the ZenFone 3 series product life cycle dissipates toward the end of the first half.

However, shortages in key components have affected Asustek’s plan, Shen said, declining to elaborate on the potential effect on the company’s smartphone business.

The affected components include DRAM, flash memory and flat panels that are used in both notebooks and smartphones, Asustek said.

The component shortages would increase manufacturing costs for Asustek, as component prices rise, industry analysts said.

To cope with rising manufacturing costs, Shen said the company has increased the retail prices for some of its notebook models in selected markets and also plans to hike prices for new models.

With the supply of key components tight, Asustek is to allocate their use to high-margin notebooks such as gaming and two-in-one detachable or convertible products to ensure that the company’s margins remain stable, chief financial officer Nick Wu (吳長榮) said.

Asustek forecast that the proportion of its revenues it gains from its PC business this quarter would drop to 15 percent, from last quarter’s 20 percent, while mobile business revenue would fall by between 10 percent and 15 percent due to seasonal weakness, Wu said.

Looking forward, Shen said Asustek this year hopes to ship close to last year’s 20.61 million PCs.

Revenue from the firm’s PC business is expected to grow mildly year-on-year on the back of increasing sales contributions from higher-priced gaming and two-in-one notebooks, Shen said.

The company last year reported a combined net income of NT$19.2 billion (US$624.08 million), representing NT$25.9 per share, 12 percent higher than 2015’s NT$17.09 billion, or NT$23 per share, company data showed.

Gross margin last year contracted 0.2 percentage points year-on-year to 13.6 percent, while operating margin fell 0.5 percentage points annually to 4.1 percent, the data showed.

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