Tiawan see solid growth for tech in 1998..........................................
asia1.com.sg
TAIPEI
Taiwan's high-tech sector puts up sterling showing
Technology shares still worth betting on again this year, say analysts
E
NDURING Asian financial storms, volatile world capital flows and a fickle global technology market, Taiwan's burgeoning high-tech sector racked up spectacular gains in 1997.
Even after a dramatic September correction that shaved one third from the main index, the stock market's technology sector roughly doubled in 1997 -- with many shares doing even better.
Analysts say with that kind of record, Taiwan technologies are worth betting on again in 1998, especially those doing custom design, manufacturing, testing and packaging of integrated circuits, microcomputer assembly and electronic components.
"Taiwan's electronic industry remains outstanding, having performed much more strongly than expected in 1997," said International Investment Trust vice-president David Yu.
Mr Yu calculated the technology sector enjoyed average earnings per share growth of 40 per cent in 1997 over 1996, double the industry's initial forecasts of 15-20 per cent and enough to outperform the global industry average in 1997.
He is forecasting 1998 EPS growth at an attractive 17 per cent, saying levels higher than that were unlikely on top of the high base of such a banner year.
Analysts said they expected the electronics sector to continue to set the pace and direction of the wider stock market.
"In 1997, electronics was the bellwether sector. In 1998, it will continue as trend-setter," said HSBC James Capel research manager Alex Chen.
Analysts cautioned that Asia's currency crisis was sure to slow demand for Taiwan computer exports in 1998, but said Taiwan's prowess in making low-end personal computers and the success of Intel Corp's Pentium II chip would keep the island's manufacturers flush with orders.
"The popularity of low-priced PCs will be an advantage for Taiwan makers as they are so good at flexible and mass production," said Michael On, head of Young Asset Management.
Taiwan's technology firms have prospered through two key strategies -- making computers, components and even microchips to order and putting production facilities close to markets.
The build-to-order strategy has transformed semiconductor manufacturing, where "foundry" pioneers Taiwan Semiconductor Manufacturing Corp and United Microelectronics Corp have taken a global lead. Taiwan Semicon shares rocketed 208 per cent in 1997, while United Micro rose about 113 per cent.
Taiwan computer makers have gained flexibility and insulated themselves from currency risk by adopting a global logistics strategy -- establishing production bases around the world not so much to tap cheap labour but to get close to their markets.
Chen of HSBC James Capel said global microcomputer shipments rose a healthy 14 per cent in 1997, but that Taiwan's shipments of notebook computers had surged a 22 per cent while those of motherboards had soared 39 per cent. -- Reuters |
