Do not give up on the PC hardware sector yet, Daiwa Capital Markets said in its latest industry report released yesterday.
Daiwa said it would be a mistake to oversimplify the status of the PC sector by only considering weakening shipments.
Last month, International Data Corp (IDC) reported that worldwide PC shipments declined by a record 13.9 percent year-on-year to 76.3 million units in the first quarter of the year, while researcher Gartner Inc said that global PC shipments contracted by 11.2 percent year-on-year to 79.2 million units last quarter, their lowest level since the second quarter of 2009.
Both IDC and Gartner warned that PCs have become a less attractive alternative to tablets and other mobile devices, but Daiwa said industry statistics might not reflect market reality, especially at a time when mobile devices are converging.
In addition, there are still certain catalysts for growth in the sector during the second half of this year, Daiwa said, citing rising sales of touch/hybrid notebook PCs and lower-priced “smart” devices as well as the imminent corporate PC replacement demand after Microsoft Corp’s support for Windows XP officially ends in April next year.
“Touch/hybrid notebooks are likely to be the most important product for the PC industry this year and beyond,” Taipei-based Daiwa analyst Steven Tseng (曾緒良) said in the report.
While higher prices for touch or hybrid notebooks may cap initial demand, Tseng said he expects to see an increase in the number of touch-enabled PCs, which would lead to more touch-based applications and content, and in turn attract demand for such products.
Daiwa forecast that touch notebook penetration, or the proportion of touch notebook shipments in companies’ total notebook shipments, would rise to 20 percent in the final quarter of the year from 5 percent last quarter.
PC makers may also see a window opening for them in the field of lower-priced devices, if smartphones and tablets face a slower growth in prices and shipments.
Global shipments of lower-priced devices are forecast to reach 359 million units this year and rise to 484 million units next year, according to Daiwa.
“We expect an improving risk-reward profile for the regional PC hardware sector” in the coming quarters, Tseng said, adding that he has set “buy” ratings for shares of Lenovo Group Ltd (聯想), the world’s second-biggest PC maker, based on its leadership in China; and on Pegatron Corp (和碩) stock based on its role as an assembler of Apple Inc’s iPhone and iPad.
Tseng also offered “outperform” ratings on shares of Asustek Computer Inc (華碩), the world’s fifth-largest PC brand; Quanta Computer Inc (廣達), the world’s top contract laptop maker; and laptop battery pack maker Simplo Technology Co (新普), according to the report.