November 13, 2017 11:30 pm JST

Apple suppliers power Taiwan tech sector's growth in October

Industry revenue jumps 6.3% despite iPhone X hiccups

CHENG TING-FANG, Nikkei staff writer

An Apple sales associate speaks with a customer as she purchases a new iPhone X in New York. © Reuters

TAIPEI -- Apple suppliers fueled a 6.3% surge in aggregate revenue among Taiwan's major technology companies in October, compared with a year earlier, bringing the sector's growth streak to 11 months. 

The gains came ahead of the Nov. 3 launch of the iPhone X, even though component makers and assemblers were grappling with production issues amid brisk demand for Apple's new flagship handset.

All told, 19 tech companies on the Nikkei Asian Review's watch list reported 1.162 trillion New Taiwan dollars ($38.54 billion) in sales for October. Thirteen saw revenue rise on the year, including nine Apple suppliers. The nine generated more than NT$989 billion in total sales -- a year-on-year increase of over 9%.

Winners

Sole iPhone X assembler Hon Hai Precision Industry, better known as Foxconn Technology Group, managed a modest 2.87% increase due to relatively low production volume stemming from a shortage of components. Foxconn has been turning out about 400,000 iPhone X units a day, below the planned capacity of around 600,000, according to Jeff Pu, an analyst at Taipei-based Yuanta Investment Consulting.

Pu noted that while Hon Hai is making more iPhone X handsets now, some component makers, including those supplying parts for Face ID, have yet to fully resolve production bottlenecks. This has pushed back the traditional peak season for the iPhone supplier from the July-September period to the three months through December, according to analysts and industry sources.

Still, many of the best October performers on the watch list were Apple suppliers.

Metal casing provider Catcher Technology saw monthly sales surge more than 51%, thanks to Apple orders. Its top line has also received a boost from the new business of assembling glass backs and metal frames for the iPhone 8.

Macbook and Apple Watch maker Quanta Computer saw revenue jump more than 48%, while iPad supplier Compal Electronics achieved a gain of more than 12%.

TPK Holding reported a 21% increase thanks to a higher price tag on touch modules used for the iPhone X's organic light-emitting diode, or OLED, display.

Taiwan Semiconductor Manufacturing Co., the sole supplier of iPhone core processor chips, reported record monthly revenue of NT$94.51 billion, up 3.7% from a year earlier. Sales of Advanced Semiconductor Engineering, a key chip packaging service provider and tester for Apple, rose 7.5%.

Despite the strong results, many investors are in wait-and-see mode. "The demand for the iPhone 8 and iPhone 8 Plus is disappointing," Yuanta's Pu said. "Meanwhile, it's still uncertain whether the sell-through of the iPhone X could be as robust as expected. ... Investors are a bit cautious at the moment [about pouring] more money into stocks of Apple suppliers."

Another outstanding performer on the list was Nanya Technology -- the world's fourth-largest supplier of dynamic random access memory (DRAM) chips by market share. The company's revenue increased more than 32% on the year, thanks to rising chip prices and tight supply.

Losers

On the other hand, last month's losers included device makers HTC and Asustek Computer, mobile chip provider MediaTek, and electronic component supplier Lite-On Technology. Their sales dropped by 25.79%, 9.51%, 11.74% and 14.18%, respectively; all four have been losing market share since the beginning of the year.

Panel maker AU Optronics saw revenue dip 9.89%, while rival Innolux suffered an 11.86% decline. They were both hurt by falling display prices and concerns about a looming supply glut.

Nikkei staff writers Kotaro Hosokawa, Kensaku Ihara and Chien Chia-Hung contributed to this report.

Asia300

Hon Hai Precision Industry Co., Ltd.

Taiwan

Market(Ticker): TAI(2317)
Sector:
Industry:
Electronic Technology
Computer Peripherals
Market cap(USD): 60,767.2M
Shares: 17,328.7M
Asia300

Catcher Technology Co. Ltd.

Taiwan

Market(Ticker): TAI(2474)
Sector:
Industry:
Producer Manufacturing
Metal Fabrication
Market cap(USD): 8,450.36M
Shares: 770.39M
Asia300

Quanta Computer, Inc.

Taiwan

Market(Ticker): TAI(2382)
Sector:
Industry:
Electronic Technology
Computer Processing Hardware
Market cap(USD): 8,460.93M
Shares: 3,862.63M
Asia300

Compal Electronics, Inc.

Taiwan

Market(Ticker): TAI(2324)
Sector:
Industry:
Electronic Technology
Computer Processing Hardware
Market cap(USD): 3,057.17M
Shares: 4,421.87M
Asia300

TPK Holding Co. Ltd.

Taiwan

Market(Ticker): TAI(3673)
Sector:
Industry:
Electronic Technology
Electronic Components
Market cap(USD): 1,192.21M
Shares: 406.66M
Asia300

Taiwan Semiconductor Manufacturing Co., Ltd.

Taiwan

Market(Ticker): TAI(2330)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 208,150M
Shares: 25,930.4M
Asia300

Advanced Semiconductor Engineering, Inc.

Taiwan

Market(Ticker): TAI(2311)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 10,875M
Shares: 8,724.62M
Asia300

Nanya Technology Corp.

Taiwan

Market(Ticker): TAI(2408)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 7,553.17M
Shares: 2,751.05M
Asia300

HTC Corp.

Taiwan

Market(Ticker): TAI(2498)
Sector:
Industry:
Electronic Technology
Telecommunications Equipment
Market cap(USD): 1,843.21M
Shares: 821.52M
Asia300

ASUSTek Computer, Inc.

Taiwan

Market(Ticker): TAI(2357)
Sector:
Industry:
Electronic Technology
Computer Processing Hardware
Market cap(USD): 6,838.78M
Shares: 742.76M
Asia300

MediaTek, Inc.

Taiwan

Market(Ticker): TAI(2454)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 17,320.6M
Shares: 1,581.46M
Asia300

Lite-On Technology Corp.

Taiwan

Market(Ticker): TAI(2301)
Sector:
Industry:
Electronic Technology
Computer Peripherals
Market cap(USD): 2,938.1M
Shares: 2,350.87M
Asia300

AU Optronics Corp.

Taiwan

Market(Ticker): TAI(2409)
Sector:
Industry:
Electronic Technology
Electronic Equipment/Instruments
Market cap(USD): 3,982.78M
Shares: 9,624.25M
Asia300

Innolux Corp.

Taiwan

Market(Ticker): TAI(3481)
Sector:
Industry:
Electronic Technology
Electronic Components
Market cap(USD): 4,366.54M
Shares: 9,952.07M

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