Asian electronics manufacturers -- from Taiwan's Quanta Computer Inc (廣達) to Venture Manufacturing Singapore Ltd -- are poised to gain from an expected recovery in personal computer sales following Compaq Computer Corp and Apple Computer Inc's earnings, investors say.
Compaq and Apple said they expect to beat sales forecasts this quarter, sending shares of two of the largest personal-computer makers higher. Both said they had profits in the quarter that ended last month after reporting losses a year earlier, when the economic slowdown took investors and PC makers by surprise.
The earnings results of the two PC makers may signal stronger demand ahead for other rivals from Hewlett-Packard Co to Dell Computer Corp, investors say. This, in turn, would translate to more orders for Asian manufacturers.
"Going forward, things will be recovering," said Sheree Tan, a director of Morley Fund Management (Singapore) Ltd, who helps manage S$3.6 billion (US$2 billion). "We are generally more positive on PCs because there are signs demand is picking up."
Asian manufacturers are likely winners of any rebound in PC sales because of lower costs compared to the North American market, where Solectron Corp, Celestica Inc and other key makers of electronics for brand-name companies are based.
Solectron and Celestica have bought up Asian manufacturers in the past year to tap lower costs in the region. Singapore's Venture and others with plants in Southeast Asia and China will probably boast of costs that are a quarter of that in the US to attract orders from PC makers as they farm out more manufacturing work, analysts say.
"From an overall tech sector standpoint, my view is that you're going to hear an upward bias for tech stocks this year," said Jatin Doktor, an analyst at G.K. Goh Research Pte. in Singapore. "You're going to see a recovery phase and suppliers would expect to benefit from that."
Some electronics parts makers are already pointing to signs of an improvement in demand. Compal Electronics Inc (仁寶電腦), a Taiwanese maker of notebook computers for Dell, Hewlett-Packard and other computer companies, said two weeks ago sales will rise this year as customers place more orders.
Venture, which took investors on a plant tour last month, said it's adding production lines as it received more orders.
Within Asia excluding Japan, market researcher IDC said the PC market rose 1.9 percent on year to 5.7 million units in the fourth quarter, pushing the PC market up 7 percent for 2001. PC sales are expected to rise by about 12 percent this year, IDC estimates.
"The signs are encouraging that the worst is over for the region's markets," said Bryan Ma, a research manager at IDC in Singapore. "While consumer and corporate buying may not have returned to the level attained in 2000, the declines have been less drastic than previously expected given the dramatic events that have unfolded since September."
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