Intel Urges Delayed Promotion of 845 Motherboards.
09:20am EDT 3-Aug-01 Bear Stearns (Kalra/Han/Tse/ Dinesh Moorjani/ Ro) INTC
Asian Tech Daily PART 1
Gurinder Kalra 852 2593-2748 gkalra@bear.com August 3, 2001
Keon Han 852 2593-2644 khan@bear.com
Jack Tse/ Dinesh Moorjani/ Roxy Wong
Subject: Market Commentary/Strategy
Industry: Asian Technology
BEAR, STEARNS & CO. INC.
EQUITY RESEARCH
Asian Tech Daily
(Acer Display, Unipac, Chunghwa Picture Tubes, CHPC, INTC)
Tech Insights
Taiwan TFT-LCD Makers See Demand Boost from LCD Monitors. TFT-LCD
manufacturers in Taiwan increased production in July, with most companies
reporting about a 10% MoM increase in unit shipments. Chi Mei Optoelectronics
(unlisted) was the only exception among the large manufacturers, being limited
by its production capacity. Before its Fab 2 begins volume production in
September, its TFT-LCD shipments will probably remain at 150,000-160,000 units
per month. Shipments by Taiwanese makers for LCD monitors has interestingly
surpassed those for notebook computers, the proportion of monitor panels being
50% for AU Optronics (2409.TT-ADT/5441.TT-Unipac), 65% for HannStar (unlisted),
and 85% for Chunghwa Picture Tubes (5430.TT). AU Optronics expects U.S. LCD
monitor demand to increase considerably in August, following the trend that has
been taking place in Europe and China. The company is forecasting its August
shipments to reach 380,000 units, a 27% MoM increase.
Taiwan TFT-LCD Shipments in June and July (000s)
March April May June July MoM Gr. (%)
AU Optronics 273 295 380 300 330 10
Chi Mei Optoelectronics 155 180 167 170 150-160 -11.8 to -5.9
Chunghwa Picture Tubes 115 131 130 126 140 11
HannStar Display 105 130 181 200 224 12
Total 648 736 858 796 844-854 6.0-7.3
Source: Digitimes
ChipPAC's 2Q Results in Line with Expectation. ChipPAC (CHPC-10.58,
Attractive, covered by Robert Maire & Gurinder Kalra) reported 2Q loss of
US$7.5 million, or US$0.11 per share, meeting consensus estimate. Second-
quarter revenue declined 2.8% sequentially to US$87.4 million, in line with the
0-5% revenue decline guidance given during the 12th Annual Bear Stearns
Technology Conference in June. ChipPAC maintained a 13.1% gross margin in 2Q,
one of the highest among major IC packaging companies. Capacity utilization
rate improved to 50-55% from 45-50% in 1Q as a result of increased "turns"
business during the quarter. The company also benefited from its minimal
exposure to the wireline communications segment and stabilization in the PC
segment. ChipPAC has guided a 10-15% revenue decline in 3Q and a loss in the
range of US$0.19 and US$0.27 per share.
Intel Urges Delayed Promotion of 845 Motherboards. According to China Economic
News Service, Intel (INTC-US$32.11, Buy, covered by Charles Boucher) has asked
motherboard makers in Taiwan to delay advertisement of Pentium 4 motherboards
based on 845 chipsets until September 10, although Intel has suggested all
makers launch their 845 boards on August 26. The article said that according
to a local industry source, Intel will aggressively promote the P4 processor to
be the mainstream processor by year-end, and Intel sees 845 motherboards as
critical to achieve this goal. Intel recently stated its expectation of the P4
to account for 60% of its processor deliveries by year-end, up from 30% at
present. The source further said that Intel will cut prices on its processor
lines later this month or in the run-up to the official advertising for 845
boards, and said the delay in product debut and official promotion will allow
for final-stage product testing and help generate a buzz of consumer
anticipation. We spoke to one of the Taiwanese motherboard makers - the
company spokesman would not confirm this article, but said the company would
cooperate with Intel if such request were made.
Focus of the Day
June SIA Data In-Line With Expectations, Signs of Bottoming Fundamentals.
(Charles Boucher 415-772-2953) The SIA released its June Global Billings Report
yesterday which showed continued weakening of YoY growth rates in line with our
expectations. 3-month moving average unit growth was -21%, down from -16% in
May; 3-month moving average revenue growth was -30%, down from -20% in May. We
believe revenue growth is likely to decline in the 25-30% range in 2001.
Further, we believe that YoY unit growth rates are in the process of bottoming
now, a process that should be confirmed by subsequent SIA Global Billings
Reports. Recent anecdotal evidence has shown bookings improvement in the PC and
peripherals, wireless handset, and consumer component markets, and if this
trend persists, will result in improving YoY comparisons. We also note that
unit shipments were up 16% sequentially in June, which is the strongest May-to-
June increase on record. Semiconductor stocks have resisted the precipitous
decline in fundamentals since the beginning of 2Q, with stocks trading in a
highly volatile range but essentially tracking sideways. This has led to a
relatively lofty average valuation for the semiconductor universe versus prior
downturns. We believe that semi stocks are trading like cyclical growth stocks
for the first time, maintaining high valuation at the bottom of a down cycle.
It remains to be seen whether they will maintain cyclical behavior and undergo
valuation contraction near the top of an expansion cycle. We suspect that
accelerating growth rates could drive semi stock valuations to levels that
could become increasingly difficult to justify if the recovery gains momentum.
Market Update
% Change
Level 1D WoW YTD
SOX Index 657 3 12 14
Bloomberg Asia-Semi 125 5 10 (13)
Bear Stearns Asia Tech 3,709 2 9 11
KOSP ELEC - Korea 2,280 (1) 8 16
TWSE ELEC - Taiwan 241 4 7 8
SES ELEC - Singapore 141 2 4 6
HK GEM - Hong Kong 240 0 (0) (22)
Nasdaq 1,751 1 5 (25)
Tech Bellwethers
% Change
Price 1D WoW YTD 52WH 52WL
INTC US$ 32 4 8 7 76 22
MSFT US$ 67 1 1 56 76 40
CSCO US$ 20 (0) 4 (47) 70 13
MU US$ 45 3 10 26 93 28
Samsung* KW 196 (1) 8 24 323 137
TSMC NT$ 71 3 17 24 100 54
Creative US$ 8 3 (1) (24) 24 8
Infosys Rs 3,772 4 3 (33) 8,847 2,850
* In 000s
DRAM Spot Prices
Price (US$) % Change
Aug 2, 2001 WoW MoM
64Mb (8x8 PC133) 0.77 (6) (6)
128Mb (16x8 PC133) 1.56 (5) (6)
Behavior Historical Low
Source: Fuji Ace International, Ltd.
Selected Asian Tech Stocks
% Change
Country Company Price 1D 1W YTD 52WH 52WL
Taiwan UMC NT$ 40.2 3 8 (4) 75 35
Taiwan Asustek NT$ 155.0 3 3 95 190 77
Taiwan Acer NT$ 16.8 3 3 23 40 14
Taiwan ASE NT$ 17.4 7 2 (10) 54 14
Taiwan Hon Hai NT$ 167.0 1 6 19 218 122
Taiwan Quanta NT$ 93.5 2 1 34 120 64
Korea Hynix KW 1,615 2 33 (60) 22,800 1,150
Korea LG Electronics KW 14,900 (1) 2 25 31,400 11,150
Korea Samsung Display KW 24,000 3 6 36 27,200 13,900
Korea Samsung Elec-Mech KW 40,300 4 2 17 53,000 30,500
Singapore Chartered S$ 5.2 3 20 10 15 4
Singapore Venture S$ 13.8 4 8 19 23 10
Singapore Creative S$ 15.3 1 0 (22) 40 15
Singapore Datacraft S$ 4.1 5 15 (14) 9 3
Singapore Natsteel S$ 1.0 2 3 (35) 2 1
Singapore STATS S$ 1.8 5 17 (22) 4 1
Hong Kong Legend HK$ 4.3 (2) 4 (13) 9 4
Hong Kong ASM Pacific HK$ 13.9 5 13 25 28 9
Hong Kong QPL HK$ 3.1 13 16 (32) 8 3
Hong Kong Johnson Electric HK$ 11.5 (2) 7 (4) 19 10
Bear Stearns Asia Tech Index (+2.4%)
Companies mentioned:
Acer Display (2409.TT)
Unipac (5441.TT)
Chunghwa Picture Tubes (5430.TT)
ChipPAC (CHPC)
Intel (INTC) |
