Accton Technology Corp (智邦科技) should see robust sales growth this year, due to strong demand for 400-gigabit (400G) switches, CL Securities Taiwan Co Ltd (台灣匯立證券) said last week.
“We believe Accton’s 400G switch sales will pick up strongly in 2Q 2019 thanks to an attractive 400G total cost of ownership (switch + transceiver), which could fall from 3.9 times that of 100G in 2019 to as low as 2.7 times in 2020, potentially making 400G become mainstream in hyperscale datacenters in 2020-2021,” CL Securities analyst Skye Chen (陳淑玲) wrote in a note on Wednesday.
“We forecast 400G will start to contribute to 5 percent and 10 percent of Accton’s 2019 and 2020 sales respectively, with Facebook Inc and Amazon.com Inc the major customers,” Chen said.
Telecom devices would also remain a major driver for sales this year, and Accton began shipping small numbers of switches for 5G core networks in the last quarter and shipments should become more meaningful from the second quarter of this year onward, Chen said.
“We project 5G core networks will contribute to 8 percent and 15 percent of the company’s sales in 2019 and 2020 respectively,” with AT&T Inc and Japanese telecom operators as major customers, she said.
Enterprise upgrades from 1/10G to 10/25G switches are expected to continue to boost Accton’s original design manufacturing (ODM) business’ gross margin, from 17.2 percent last year to 17.9 percent, with the ODM business forecast to account for 34 percent of Accton’s sales this year, Chen said.
Accton posted record sales of NT$4.94 billion (US$160.2 million) for last month, up 24.65 percent year-on-year.
Total sales for last year increased 18.23 percent annually to NT$43.09 billion, also a record-high level, after Facebook, Amazon, HP Inc and smart network interface cards (smartNICs) contributed to sales in the final quarter.
SmartNICs help offload processing tasks normally handled by CPUs, thus sharing part of the CPU’s workload and improving CPU efficiency, Chen said.
"Our checks indicate that Accton’s SmartNIC was sold mainly to Amazon Web Services in 4Q 2018. We expect wider SmartNIC adoption in the future as more and more servers are providing slots for them," Chen said.
Shares in Accton rose 2.39 percent to NT$107 on Friday in Taipei trading. They have increased 8.52 percent so far this year.
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