A recovery in the industrial automation sector is likely to occur later than expected due to the COVID-19 pandemic, Yuanta Securities Investment Consulting Co (元大投顧) said in a report, reversing its prediction that an upcycle would begin around the middle of this year.
“A few applications are forming another industrial automation upcycle ... although the upcycle will arrive later than expected owing to COVID-19,” Yuanta analysts led by Kenny Chen (陳景文) said in a note on Thursday last week.
However, if the effects of the outbreak continue, the second half is likely to slow downstream clients’ destocking demand and put pressure on the average selling prices of component makers, Chen said.
Based on the monthly revenues that component makers released this month, linear-motion component suppliers — such as Hiwin Technologies Co (上銀科技) and TBI Motion Technology Co (全球傳動) — last month performed better than pneumatic parts makers such as Airtac International Group (亞德客) and Taiwan Chelic Corp Ltd (台灣氣立).
“For the near term, linear guide manufacturers are receiving more rush orders compared with the fourth quarter of 2019, thanks to distributors restocking in China, and we believe this will help mitigate the impact of weak demand in Europe,” Chen said.
“For the medium to longer term, we believe the sector’s upcycle should arrive in about the late third quarter of 2020 (versus expectations of mid-2020 previously), after a 23-month recession that began in October in 2018,” he said, citing major catalysts such as 5G infrastructure construction, investment by semiconductor firms and capital spending among printed circuit board manufacturers.
Among major industrial automation players, Hiwin is expected to report quarterly increases in revenue from next quarter. Its revenue in the second half of the year is forecast to grow 18 percent year-on-year, compared with an expected 21 percent decline in the first half, Chen said.
Hiwin on Wednesday reported revenue for the fourth quarter last year decreased 39.62 percent year-on-year to NT$4.01 billion (US$132.62 million). The smaller sales scale, pricing pressure and unfavorable foreign exchange rates caused the company’s net income to decline 95.58 percent annually to NT$38.44 million, or earnings per share of NT$0.13.
For the whole of last year, its revenue dropped 31.1 percent annually to NT$20.21 billion, while net income decreased 65 percent to NT$1.87 billion, or earnings per share of NT$6.03.
Due to delayed demand recovery as the virus spread from China to the rest of the world, Hiwin’s earnings growth is not expected to turn positive until the third quarter, rather than in the second quarter as Yuanta had previously estimated, Chen said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to