VIA Technologies Inc, the world's second largest computer chipset designer, yesterday reported October sales that showed a 14 percent drop over sales in September and demonstrated, according to analysts, flat PC demand in the fourth quarter.
Revenue last month increased 77.2 percent over the corresponding month a year ago to NT$3.032 billion. For the first 10 months of the year, sales of NT$25.91 billion marked a 236 percent rise over the same period last year and represent 86.3 percent of VIA's financial forecast of NT$30 billion for the year.
However, October sales mark the second successive month of falling month-on-month sales and represent a 20 percent fall from record sales of NT$3.80 billion posted in August.
"With competition building up in a market where PC demand is slowing, we're quite conservative about VIA in the short term," said Patrick Wang, an analyst at Fubon Securities Co. "The October numbers affected its stock price today," he said.
While the stock market rose nearly 4 percent yesterday, shares in VIA fell 3.13 percent to NT$217. The stock has fallen 53.4 percent from an annual high of NT$466 at the beginning of September.
An official at VIA accounted for the fall in month-on-month sales by saying that customers such as motherboard and systems makers were still reducing inventory. VIA had expected this to be completed in September, but stock adjustments continued into last month, the official said. As a result, "We think demand will be postponed to this month," the official said. "So we expect revenue in November will be higher than last month."
While acknowledging that the PC industry will slow down at some point, the official pointed to the strong revenues of Taiwan's top motherboard makers as evidence of continued strong demand in the industry.
Gigabyte Technology Co, a major Taiwanese motherboard manufacturer, is anticipating record revenue for October. The company set its current record in September on the back of rising demand in China.
Meanwhile, Asustek Computer Inc, Taiwan's largest motherboard manufacturer, also posted record revenues in September and is also expected to follow that up with another record for October.
But record sales at the largest motherboard makers don't necessarily mean the same for the whole industry, analysts said.
"Motherboard makers like Gigabyte and Asustek have posted record sales, but what about the second tier motherboard makers," said Andrew Teng, a semiconductors analyst at Taiwan International Securities Corp.
"Those big players get the majority of sales, while the smaller ones lose sales," he said.
Teng said that he accepts VIA's explanation that clients want to work down their inventory before making any more purchases. But he disagrees about a pick-up in demand in November.
"We think this is not possible because we think demand for PCs is going to be flat in the fourth quarter," he said.
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