Analysts paint cheery picture for smartphones, tablets

By Kevin Chen  /  Staff reporter

Thu, Oct 18, 2012 - Page 14

Taiwanese manufacturers that have bigger exposure to the smartphone and tablet sectors will fare better than their peers that are dependent on PCs after US chip giant Intel Corp suggested PC demand this quarter would not be as strong as in the past, a local brokerage said.

“The ongoing macro[-economic] weakness and strong competition from tablets and smartphones will likely hit Intel’s core computing market,” Carlos Peng (彭國維) and Claire Su (蘇育慧), analysts at Fubon Securities Investment Services Co (富邦投顧), wrote in a client note yesterday.

The analysts’ remark came after Intel on Tuesday reported above-consensus third-quarter results, but guided to below-consensus revenue in its PC and server businesses for this quarter.

The US company posted a profit of US$2.97 billion, or US$0.58 per share, in the third quarter, down 14.41 percent from a year earlier, while revenue dropped 5.5 percent to US$13.5 billion. The results beat Fubon’s estimate and market consensus of a profit of US$0.49 per share on sales of US$13.2 billion.

While the Windows 8 operating system will make its debut on Oct. 26, Intel forecast flat revenue growth in this quarter of between US$13.1 billion and US$14.1 billion, compared with a market consensus of US$13.7 billion.

Fubon analysts said their latest supply-chain checks suggested Windows 8 demand is still weak in Taiwan. Earlier this month, other analysts such as Fubon’s Arthur Liao (廖顯毅) and Barclays Capital’s Kirk Yang (楊應超) already revised downward their PC shipment forecasts for this quarter, citing the industry’s cautious stance toward Microsoft Corp’s new operating system.

“So far we have yet to see any significant inventory built for Windows 8,” Peng and Su wrote in the note, indicating this is an unusual situation as PC inventory tends to build up at this time ahead of the annual holiday season.

“Although Intel has been hoping that their CPU [central processing unit] shipments in both the PC and server segments will grow slightly in the fourth quarter, we still hold a conservative view toward the global PC IC demand in the fourth quarter,” they wrote.

Among Taiwan’s semiconductor shares, both Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (聯電) are likely to be affected by slowing PC sales this quarter, but Fubon said it still favored TSMC due to Qualcomm Inc’s strong reliance on TSMC’s 28-nanometer chips for its mobile devices.

Fubon said it was turning cautious on Nan Ya Printed Circuit Board Corp (南亞電路板) because of the company’s high inventory risk, while sticking with Asustek Computer Inc (華碩) and Pegatron Corp (和碩) owing to their widening exposure to the tablet business.