Sustained growth prompted Credit Suisse to list local electronics giants Hon Hai Precision Industry Co (鴻海精密), AU Optronics Corp (友達光電) and Powerchip Semiconductor Corp (力晶半導體) among its favorite investment targets, the investment bank said yesterday.
Credit Suisse is positive on the Asian technology sector for the rest of this year and the first half of next year, with revenues and earnings expected to expand by 19 percent this year and 20 percent next year amid slowing capital spending, it said in a statement.
"Investors are seeking good targets that are able to deliver strong growth in the long term and defy low points in the industry," Credit Suisse hardware analyst Robert Cheng (鄭勝榮) said.
"We favor PC companies, as the segment's growth in the third quarter will be the strongest," Cheng said.
Global PC sales are expected to show annual growth of 11 percent to 12 percent this year and next year, driven by corporate PC replacement demand set to start later this year, he said.
Hon Hai, the world's biggest electronics-manufacturing service provider, tops Cheng's selection owing to its strong competitiveness, which he attributes to extensive integration in different materials and assembling, as well as having the US' Apple Inc as a customer.
Motherboard maker Asustek Computer Inc (華碩電腦) and laptop computer manufacturers Compal Computer Inc (仁寶) and Wistron Inc (緯創) are also listed among Cheng's favorites, as they are gaining market share and are expected to benefit from corporate PC replacements later this year.
Cheng made the remarks at a press briefing on Credit Suisse's three-day annual Asian Technology Conference in Taipei, which opened on Wednesday. More than 300 investors signed up for the conference.
Credit Suisse also overweighted the memory and display segments.
In the memory-chip and flat-panel display sectors, Credit Suisse picked Taiwan's Powerchip and Japanese memory-chip maker Hynix Semiconductor Inc.
It gave an "outperforming" rating on the nation's two biggest makers of liquid-crystal-display (LCD) panels, AU Optronics and Chi Mei Optoelectronics Corp (奇美電子).
Credit Suisse is conservative about foundry companies, or contract chipmakers, "as the big growth is already behind us," analyst Randy Abrams said.
United Microelectronics Corp (
However, escalating pricing competition and new players in the computer memory manufacturing sector are casting a shadow over foundry businesses, he said.
Computer memory manufacturers are converting their less advanced 8-inch plants to make chips for products like CMOS image sensors and LCD drivers to compete with existing foundry players, Abrams said.
He expects the impact to be magnified later next year.
Although their growth rates are faster than the overall tech sector, the brokerage advised investors to buy chip designers such as MediaTek Inc (聯發科) and solar-cell manufacturers including Motech Industries Inc (茂迪) only after their stock prices have come down.
It urged investors to avoid contract handset makers such as Compal Communications Inc (華寶通訊).
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