IC designer ASMedia Technology Inc (祥碩科技), a subsidiary of computer vendor Asustek Computer Inc (華碩電腦), is forecast to benefit from broader adoption of the USB3.1 port and increasing chipset orders.
Revenues and earnings for ASMedia, which designs data storage controller chips, are expected to increase, with compound annual growth rates of 68 percent and 94 percent respectively from this year to 2017, a US-based brokerage said.
The growth is likely to be driven by rising adoption of the USB3.1/Type-C connector standard and chipset orders from Advanced Micro Devices Inc (AMD), “with ASMedia leveraging its technology leadership, strong IP portfolios, solid customer relationships and competitive cost structure,” the brokerage wrote in a note to clients on Thursday.
The US-based brokerage said it is the only broker to cover ASMedia and gave an initial rating of “buy” on the stock, with a price target of NT$400.
ASMedia shares surged 9.89 percent to NT$239 yesterday.
Under Taiwanese regulations, the name of the brokerage cannot be reported because it offers specific forecasts that could influence the market.
The brokerage said it expects AMD to buy 6 million chipsets next year and 12 million chipsets in 2017 from ASMedia, after the companies announced an enhanced partnership late last year.
On the other hand, the adoption rate of USB3.1, which transmits data at 10 gigabits per second (Gbps) compared with UBS3.0’s 5Gbps, could rise to 3 percent this year and 15 percent next year from zero last year, thanks to specification upgrades among Intel Corp’s Skylake chipset platform and motherboard brands like Asustek and Micro-Star International Co (微星), the brokerage said.
The brokerage forecast that ASMedia, as a leading USB3.1 IC supplier, would increase its USB3.1 solution sales by 302 percent year-on-year next year, accounting for 45 percent of its total sales, compared with zero last year, along with a higher gross profit margin.
ASMedia, which listed on the Taiwan Stock Exchange in December 2012, reported consolidated revenue of NT$585.42 million (US$18.8 million) in the first five months of the year, a decline of 11 percent from the same period last year.
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