Quanta Computer Inc (廣達) could see a boost in its server business this quarter from Intel Corp’s upcoming launch of next-generation server chips and rising demand for data centers from Internet service providers, a SinoPac Securities Investment Services Co (永豐金投顧) report said last week.
The firm’s contribution from server sales is forecast to increase by between 10 and 15 percent this quarter from last quarter, pushing up the company’s overall revenue by 11 percent quarterly and 9 percent annually to NT$238.8 billion (US$7.98 billion), SinoPac researcher Eric Hung (洪國軒) said in the report issued on Friday.
“We believe that the server segment would be a key catalyst for Quanta, in addition to improved notebook computer demand,” Hung wrote. “The higher-margin server business will enhance the company’s overall profitability.”
SinoPac reiterated a “neutral” rating on Quanta shares, expecting the company to see net income rise 3.2 percent year-on-year this year to NT$19.2 billion (NT$4.98 per share) and increase 16 percent next year to NT$22.2 billion (NT$5.77 per share).
In recent years, Quanta has diversified its business from producing and assembling notebook computers based on other manufacturers’ designs to making cloud-based computing devices such as tablets, wearable devices, servers and data centers to capture emerging growth opportunities as notebook market competition intensifies, putting pressure on margins.
Analysts said the company’s robust revenue growth last month despite a slight decline in notebook computer shipments likely implied contribution from rising orders of cloud-related products, and expected this growth momentum to continue in the second half of the year.
Moreover, as the company has been expanding from white-box server hardware to storage, switching and rack-level solutions — a new business model which bundles servers, storage, switch and power supplies into one data center rack — its server shipments this year could increase by 20 percent annually and server-related revenue could account for as high as 30 percent of its total, they said.
“For the moment, we do not see any major competitors that are strong in servers, storage and switches, which we believe contributes to Quanta’s advantage in integrated products,” UBS Securities Pte Ltd analyst Edward Yen (顏子傑) said in a note on Friday.
Last week, Quanta told an investors’ conference that it expected notebook shipments to grow 10 percent this quarter from last quarter and server shipments by 20 percent, supported by rising rack-linked shipments.
UBS raised its target price slightly, from NT$86 to NT$92 after the brokerage adjusted upward its earnings estimates for Quanta by between 1.7 and 7 percent from this year to 2016.
BNP Paribas Securities Co forecast that the cloud-computing business would account for 18.4 percent of Quanta’s total revenue this year, up from 15 percent in the second quarter. Notebook computers would still hold a lion’s share — 64.2 percent in revenue contribution — with all-in-one computers taking a 12.1 percent share, the brokerage said last week.
However, BNP said the increasing competition from other contract server manufacturers that build solid partnerships with brand vendors would pose potential threat to Quanta.
Quanta shares were down 0.49 percent at NT$82 in Taipei trading yesterday.
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
RSS