smartphone increase

Worldwide smartphone
shipments are expected to rise
about 20 percent next year.
(Photo: Antara)
Smartphone Makers’ Shares
Heat Up on Soaring Sales
Taipei. Shares of major
smartphone makers and other
suppliers of microchips and
touch-sensitive screens in Asia
have been stellar performers
recently thanks to optimism over
sales growth next year.
As more feature-jammed
smartphones fly off the store
shelves, South Korea ’s Samsung,
the world’s No. 2 mobile
telephone maker, which supplies
touch panels, saw its share price
rise to a two-month high this
week.
In Taiwan, shares of Asustek
Computer, one of the firms that
got into the smartphone
segment this year, are hovering
at their highest level in more
than a year.
Worldwide smartphone
shipments are expected to rise
about 20 percent next year,
faster than the 9 percent growth
predicted for global PC
shipments, according to research
company IDC.
“ There is a huge opportunity,”
said Derek Lin, who manages a
multimillion-dollar fund in
markets in Asia for Taiwan ’s Uni-
President Asset Management.
“ The two biggest players in
South Korea, and HTC and some
other components makers in
Taiwan are all likely to benefit
from the boom, ” Lin said.
Samsung and LG have recently
boosted their smartphone line-
ups to compete with Apple and
Research In Motion, even though
some analysts have doubts
about Samsung ’s software
platform.
Of 45 brokers tracked by
Thomson Reuters, 43 rate
Samsung Electronics, which
makes memory chips and sells
flat-screen televisions, as either a
buy or a strong buy.
Another strong performer is chip
designer and supplier Mediatek.
Its shares have more than
doubled this year.
Mediatek and Qualcomm entered
a patent arrangement last month,
paving the way for it to gain a
bigger share in the fast-growing
smartphone chip market. US chip
designer Marvell Technology
expects smartphones to take the
lion’s share of the global
cellphone market in the next six
years.
With big PC names, including
Acer and Dell, entering the
market, where telecom operators
are selling more models running
on new software, a price war
looks set to intensify and hurt
margins next year.
Analysts attributed lower
handset prices to the rollout of
new technologies, including
cheaper panels and chips that
save power and extend battery
life.
Investors have started selling
shares of some smartphone
makers, such as Taiwan ’s HTC,
after the world’s No. 4
smartphone vendor posted
worse-than-expected November
sales this week. The stock has
fallen 10 percent since a near
four-month high on Nov. 26.
“ I want to be cautious about the
sector because selling prices are
going down next year, ” said
Vincent Chen, a technology
analyst at Yuanta Securities.
“ Not just HTC, other players will
also get hurt,” said Chen, who
put a “sell” rating on HTC.
HTC shares are trading above
most Taiwan tech rivals at about
14 times Yuanta ’s 2010 earnings
per share forecast, Chen added.
Given a lack of scale and 3G
patents, Citi rated HTC at “sell”
and forecast its 2010 net profit
would fall 16 percent from 2009,
with its operating profit margin
shrinking to 13.1 percent from
this year ’s 16.4 percent.
Mediatek was not a good target
at its current price of around
517 New Taiwan dollars a share,
said Jih Sun Investment
Consulting manager Kevin Chung.
“ There are risks and I don’t think
foreign investors will add to
their holdings. If the stock falls to
400 New Taiwan dollars to 450
New Taiwan dollars, then I
believe some people will pay
attention to the stock again, ” he
said, citing growing pricing
pressure in the smartphone
market.
Reuters