Asustek grapples with exchange losses - Taipei Times
Sat, Aug 11, 2018 - Page 12 News List

Asustek grapples with exchange losses

COMPONENT SHORTAGES:Chief executive officer Jerry Shen said that supply-chain constraints have dashed hopes of its smartphone business being profitable in Q3

By Ted Chen  /  Staff reporter

Asustek Computer Inc (華碩) yesterday gave a reserved outlook for this quarter as the company grapples with widening foreign exchange losses in the wake of the US-China trade war.

In the past quarter, the company reported NT$1.41 billion (US$45.92 million) in foreign exchange losses as currencies of its major overseas markets fell sharply.

In the first quarter, the company posted NT$1.17 billion in foreign exchange gains.

“The value of the Chinese currency fell by 6 percent against the US dollar in the past quarter, with Russia seeing a 9 percent drop,” Asustek chief financial officer Nick Wu (吳長榮) said during a teleconference.

As the company pays its suppliers and production partners in US dollar, devaluation of sales proceeds from those markets has dampened earnings growth, Wu said.

The company reported that net income last quarter dropped 34 percent annually to NT$1.33 billion, while net revenue slipped 7 percent annually to NT$80.53 billion.

Earnings per share were NT$1.8 last quarter, a new quarterly low since 2010.

Wu said that continued currency devaluation could affect consumer spending at its key overseas markets.

In addition, competition is intensifying in Europe, where rival brands have proved to be more nimble in releasing stronger PC offerings, Wu said.

Contributions from Europe dropped from 34 percent of Asustek’s net revenue at the end of March to 29 percent at the end of June, company data showed.

Wu said that other challenges include anticipated delays in Intel Inc’s and Nvidia Corp’s new central processing units and graphics processing units (GPUs).

As the bitcoin enters a bear market, the demand for GPU-based crytpocurrency mining has also affected sales of Asustek’s graphics cards, which represents a significant portion of the company’s hold in the premium PC gaming market, Wu said.

Miners have begun to shift to ethereum — which uses design application-specific ICs — as opposed to bitcoin, which is mined with graphics cards.

Meanwhile, Asustek chief executive officer Jerry Shen (沈振來) said that supply-chain constraints have dashed hopes of seeing its smartphone business turn profitable this quarter.

Shen said that component shortages have prevented the company from shipping enough smartphones to satisfy rising demand and the company would establish a team to improve the management of its supply chain.

“To be profitable, we need to ship a minimum of 4 million to 5 million units each quarter,” Shen said, adding that he remained confident Asustek’s smartphone business would finish the final quarter of the year in the black.

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