The boom years for Taiwan's personal computer industry are over, analysts said yesterday, after chip giant Intel Corp warned on Thursday that slowing PC demand would hurt its fourth quarter revenues.
Intel said that fourth quarter sales would be about the same or slightly lower than its third quarter numbers as a result of cancellations by customers worldwide.
Intel's second warning in less than three months follows similar recent warnings by PC stalwarts Apple Computer Inc, Gateway Inc and Dell Computer Corp in the US.
In Taiwan, computer maker Acer Inc (宏電) lowered its revenue target by nearly a third at the end of October.
"This is the final straw," said Elise Tung, an analyst at Taiwan International Securities Corp. (金鼎證券) "You just cannot remain bullish on PC stocks anymore," she said.
Intel's announcement was followed yesterday by the release of Acer's November revenue figures that showed sales fell more than 40 percent from the same month a year ago.
After posting annual growth rates averaging 30 percent over the last three years, slowing PC demand forced Acer to lower its revenue forecast for the year by 30 percent to NT$105 billion.
That's down nearly a fifth on last year's revenue.
"The PC slowdown is definitely not good for Taiwan's PC-related companies in the long term unless they can diversify their product base and find growth drivers other than PCs," said Alfred Ying, an analyst at BNP Paribas Peregrine Securities in Hong Kong.
In Acer's case, chairman Stan Shih (施振榮) said last month that he was engaged in internal reviews in order to ``transform and reposition'' his group. "I have to change minds or change people," Shih was quoted as saying at a seminar at the end of November.
"The PC market is slowing down, so of course they have to diversify into other industries," said Aaron Wu, an analyst at Barits Securities Co.
But while the Intel warning carries bad implications for Acer and the whole PC industry, "There won't be any more news more negative than this," Wu said.
Other analysts agreed.
"Probably the downside for PC-related stocks is not very big now," said Alfred Ying.
Shares in Acer have fallen more than 80 percent this year from a high of NT$100 in January. They closed yesterday unchanged at NT$20.1.
Even so, any upside for shares in the PC sector is likely to be limited, analysts said.
"Maybe this is a good time to buy the stocks," said Elise Tung. "But if they're not going to grow 20 percent or 30 percent, then why put your money in them?"
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