Signs that camera lens supplier Largan Precision Co (大立光) is to gain orders for Samsung Electronics Co’s high-end smartphones at the expense of Samsung Electro-Mechanics Co and other South Korean lens makers bodes well for the Taiwanese firm, Citigroup Global Markets Inc said in a note to clients on Tuesday.
Citigroup retained its “buy” recommendation on Largan’s shares, with target stock price of NT$5,400, saying that market concerns over Chinese rival Sunny Optical Technology Group Co (舜宇光學) entering the handset lens supply chain of Apple Inc might be outsized, while potentially downward order revisions for new iPhones could be manageable.
Largan shares rose 2.49 percent for the whole of last week, closing at NT$3,915 on Friday in Taipei trading.
The stock has risen 21.77 percent this year.
“We believe that investors underappreciate Largan’s share gained in Samsung’s premium model. Samsung should make up 10 to 20 percent of Largan’s revenue between the fourth quarter of 2019 and the first half of 2020,” Citigroup wrote.
“Largan’s black+small lens can create value to Samsung’s full OLED screen Note/5G phone,” it said.
Local media last week reported that Sunny Optical is likely to enter the supply chain for iPhone handset lens sets (HLS) as early as 2021, which would negatively affect business at Taiwanese suppliers such as Largan and Genius Electronic Optical Co (玉晶光).
“We believe that investors’ concerns on Sunny Optical breaking into Apple HLS is overdone,” Citigroup said.
“Sunny Optical has no urgency to enter the Apple supply chain given its focus on China brands and Samsung so far,” it said.
It is likely that Largan will secure orders for Huawei Technologies Co’s (華為) 5G phones, which would be an upside for Largan’s revenue from the fourth quarter of this year to the first quarter of next year, Citigroup said.
The contribution from Huawei orders is expected to more than offset potential sales weakness for new iPhones this year, it said.
Driven by launches of new smartphones by major brands in the second half, along with continued upgrades to handset camera specifications in terms of multi-camera setups, multi-lens designs, resolution, aperture and periscope-type lens structure, Largan’s revenue this quarter is forecast to increase 22.5 percent to NT$17.25 billion (US$549,33 million) from NT$14.08 billion last quarter, Jih Sun Securities Investment Consulting Co (日盛投顧) said in a note on Tuesday.
Revenue could rise to NT$17.39 billion in the fourth quarter, with full-year revenue up 17.19 percent annually to NT$58.54 billion, Jih Sun Securities said.
Jih Sun Securities upgraded its “hold” recommendation on Largan’s stock to “buy,” with a target price of NT$4,380.
ASML Holding NV’s new advanced chip machines have a daunting price tag, said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), one of the Dutch company’s biggest clients. “The cost is very high,” TSMC senior vice president Kevin Zhang (張曉強) said at a technology symposium in Amsterdam on Tuesday, referring to ASML’s latest system known as high-NA extreme ultraviolet (EUV). “I like the high-NA EUV’s capability, but I don’t like the sticker price,” Zhang said. ASML’s new chip machine can imprint semiconductors with lines that are just 8 nanometers thick — 1.7 times smaller than the previous generation. The machines cost 350 million euros (US$378 million)
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Quanta Computer Inc (廣達), which makes servers and laptop computers on a contract basis, yesterday said it expects artificial intelligence (AI) devices to bring explosive growth to Taiwan’s electronics industry, as AI applications are starting to run on edge devices such as AI PCs. Taiwanese electronics manufacturers such as chipmakers, component suppliers and hardware assemblers are likely to benefit from a rapid uptake of AI applications, Mike Yang (楊麒令), president of Quanta Cloud Technology Inc (雲達科技), a server manufacturing arm of Quanta, told reporters on the sidelines of a technology forum in Taipei yesterday. “I believe the growth potential is promising once
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