Pegatron Corp (和碩) expects earnings to begin improving next quarter as new products are launched ahead of the high-season in the second half of this year.
Sales this quarter would continue to see declines that persisted during the slow season in the first three months of the year, chief executive officer S.J. Liao (廖賜政) told a teleconference yesterday.
However, revenue contribution from laptop and desktop computers was expected to shrink by 10 to 15 percent, with non-information technology related products expected to be more resilient to the slump and see smaller declines, Liao said.
Total sales during the second quarter are expected to show a double-digit growth from a year earlier, Liao said, adding that the contract electronics manufacturer would see diminished foreign exchange pressure as the New Taiwan dollar weakens.
First-quarter results were a hard hit, as increasing competition and margin compression took a toll on the Taipei-based company.
Net income fell to NT$2.08 billion (US$69.63 million), down 46.4 percent from the same period last year, while earnings per share were NT$0.8, down from NT$1.51.
Sales rose 17.5 percent year-on-year to NT$280.89 billion, while gross margin dropped to 3.3 percent, from 5 percent, with operating margin plummeting from 2.3 percent to 0.8 percent.
Chief financial officer Charles Lin (林秋炭) said Pegatron did not see a significant decline in average selling prices in the past quarter.
However, it was not able to meet its goal of achieving efficiency gains through efforts at vertically integrating its subsidiaries, Liao said.
The manufacturer was also burdened with rising capital expenditure in a bid to expand capacity and initiate product transitions at its subsidiaries, such as Casetek Holding Ltd (鎧勝), a metal casing maker that recently secured a spot in Apple Inc’s supply chain.
Although competition has been tougher as rivals expand their production capacities and outpace demand growth in the sector, the company would continue its expansion plans, Liao said, noting that smartphones still represent the biggest demand for metal casing.
Vertical integration is part of the firm’s long-term strategy and some growing pains are to be expected, Liao said.
The firm has made the same leap as when it transitioned from the PC to the mobile era, while its subsidiaries, including Kinsus Interconnect Technology Corp (景碩), are transitioning to more advanced market segments and broader product mixes, and costs would be higher during the period, he said.
Kinsus is a silicon substrate manufacturing arm of Pegatron.
“In about two years we could see vertical integration plans begin to pay off and bring improvements to margins and shortened learning curve,” Liao said, adding that costs are expected to be higher during the process.
The company also has plans to cut its reliance on consumer products and tap into more stable revenue streams from commercial and industrial customers, he said.
SECOND-RATE: Models distilled from US products do not perform the same as the original and undo measures that ensure the systems are neutral, the US’ cable said The US Department of State has ordered a global push to bring attention to what it said are widespread efforts by Chinese companies, including artificial intelligence (AI) start-up DeepSeek (深度求索), to steal intellectual property from US AI labs, according to a diplomatic cable. The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about “concerns over adversaries’ extraction and distillation of US AI models.” Distillation is the process of training smaller AI models using output from larger, more expensive ones to lower the costs of training a powerful new
Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) have repeatedly hit new highs, but an equity analyst said the stock’s valuation remains within a reasonable range and any pullback would likely be technical. The contract chipmaker’s historical price-to-earnings (P/E) ratio has ranged between 20 and 30, Cathay Futures Consultant Co (國泰證期) analyst Tsai Ming-han (蔡明翰) told Central News Agency. With market consensus projecting that TSMC would post earnings per share of about NT$100 (US$3.17) this year, supported by strong global demand for artificial intelligence (AI) applications, and the stock currently trading at a P/E ratio of below 25, Tsai said the valuation
The artificial intelligence (AI) boom has triggered a seismic reshuffling of global equity markets, with Taiwan and South Korea muscling past European nations one by one. With its stock market now valued at nearly US$4.3 trillion, Taiwan surpassed the UK, Europe’s biggest market, earlier this month, data compiled by Bloomberg showed. South Korea is about US$140 billion away from doing the same. The tech-heavy Asian markets have shot past Germany and France in the past seven months. The shift is largely down to massive gains in shares of three companies that provide essential hardware for AI: Taiwan Semiconductor Manufacturing Co (TSMC, 台積電),
The US Department of Commerce last week ordered multiple chip equipment companies to halt shipments of certain tools to China’s second-largest chipmaker, Hua Hong Semiconductor Ltd (華虹半導體), its latest action to slow the country’s development of advanced chips, two people familiar with the matter said. The department sent letters to at least a handful of companies informing them of restrictions on tools and other materials destined for two Hua Hong facilities US officials believe make China’s most sophisticated chips, the people said. Top US chip equipment companies Lam Research Corp, Applied Materials Inc and KLA Corp, each of which has significant
RSS