Given sluggish demand in developed markets and soaring inflation in emerging markets, Citigroup forecast cautious consumer discretionary spending, with notebook computer makers faring better than those in the handset supply chain.
In a report released on Thursday, Citigroup Global Markets’ equity research team wrote that margin risk was much lower for notebooks than that for handset-related companies.
“Notebook demand is more stable given low penetration in emerging markets and continuing cannibalization of the desktop market,” analyst Eve Jung said.
Compiling recent Intel guidance on notebook growth and Citi’s internal research, Jung said she “expects the notebook shipments in the third quarter from the top five notebook original design manufacturers [ODMs] to grow by 23 percent.”
The five firms are Quanta (廣達), Compal Electronics (仁寶), and Wistron (緯創資通), Inventec (英華達) and Asustek (華碩).
She also expected sales in the “second half to resume momentum after Intel’s official launch of the Centrino 2 platform.”
On the other hand, Citigroup handset analyst, Kevin Chang and Wei-chun Liu said that handset margins were at risk because of component cost concerns and the impact of soaring inflation in emerging markets.
Hopes that outsourcing from South Korean handset vendors Samsung and LG would come through seems highly unlikely, they wrote.
Nokia estimates that replacement demand would account for about 41 percent of global handset sales this year, while new subscriber demand would make up a smaller 21 percent. But with inflation surging, handset replacement has become difficult to assess, Citigroup said.
The report advised selective investment in Taiwanese handset stocks that offer high technological barriers, market share gains and a good product mix.
Citigroup reiterated its “buy” rating on notebook ODMs Quanta and Compal Electronics and cellphone lens maker Largan (大立光). It also maintained its “sell” rating on handset supply chain makers Merry (美律), Silitech (閎暉) and Compal Communications.
POWERING UP: PSUs for AI servers made up about 50% of Delta’s total server PSU revenue during the first three quarters of last year, the company said Power supply and electronic components maker Delta Electronics Inc (台達電) reported record-high revenue of NT$161.61 billion (US$5.11 billion) for last quarter and said it remains positive about this quarter. Last quarter’s figure was up 7.6 percent from the previous quarter and 41.51 percent higher than a year earlier, and largely in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$160 billion. Delta’s annual revenue last year rose 31.76 percent year-on-year to NT$554.89 billion, also a record high for the company. Its strong performance reflected continued demand for high-performance power solutions and advanced liquid-cooling products used in artificial intelligence (AI) data centers,
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
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