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Taiwan tech sales rise 1.7% in January

Apple suppliers shares up on optimism about iPhone 10th anniversary model

TAIPEI -- Revenues reported by major Taiwanese tech companies, a barometer of global electronics demand, rose on average 1.7% year-over-year in January.

In the traditionally slow month and taking into account the Chinese New Year holidays, nine out of 19 major tech companies on the Nikkei Asian Review's Asia 300 list reported a sales increase from a year ago, and four of them posted growth of more than 10%.

However, seven of them saw year-on-year revenue percentage drops in double digits.

The revenue of major Apple suppliers on NAR's watch list together increased 2.36% in January year-on-year. Most key suppliers did not see major scale-back in orders this year unlike in the year-ago period.

Key iPhone assembler Hon Hai Precision Industry, widely known as Foxconn Technology Group, reported that sales rose 2.29% to 345.33 billion New Taiwan dollars ($11.19 billion) while its smaller rival Pegatron suffered a 12% drop in revenue.

For major Macbook maker Quanta Computer, sales rose more than 33% in January from a year ago, thanks to stronger-than-expected demand for the new Macbook Pro model and its robust server business.

Key iPhone camera lens provider Largan Precision also posted a 17.88% gain in sales year-on-year in January.

Likewise, Taiwan Semiconductor Manufacturing Co., an iPhone core processor contract chipmaker, and Advanced Semiconductor Engineering, Apple's key chip assembler, both reported sales gains of 8.1% and 7.1% respectively in the month.

Apple's stock hit an all-time high on Monday due to strong iPhone 7 earnings and high expectations for the new model to be released for iPhone's 10th anniversary this year.

Shares of many Apple suppliers also advanced more than 10% over the last three months.

Largan shares have gained more than 44% for the past three months to close at NT$4,715 on Tuesday while shares of TPK Holding, iPhone's major touch model provider, surged more than 53% to NT$78.8.

Hon Hai, Pegatron, Quanta and ASE advanced 13.8%, 14.48%, 10.75%, and 14.39% respectively to close at NT$90, NT$82.2, NT$63.9 and NT$38.2 on Tuesday.

TSMC shares also climbed more than 4% in the last three months to close at NT$187.5 on Tuesday.

"Market and investors have already left iPhone 7 totally behind and they are all eyeing the iPhone 10th anniversary release in the second half of 2017," said Jeff Pu, an analyst at Yuanta Investment Consulting, "Investors are buying shares of Apple suppliers to catch the strong cycle."

Total iPhone shipments could reach 230 million this year, compared with only 215 million in 2016, Pu said. He sees shipments of some 100 million units of the new iPhone range that is set to be released this fall.

Overall, in January, two Taiwanese panel suppliers were the best performers in the month. Innolux and AU Optronics, posted 29.28% and 16.78% gains in their monthly revenue from a year ago.

Paul Peng, chairman of AUO, said on Tuesday that he saw no negative factors for the panel business in 2017.

"We are seeing healthy market condition and we expect prices to remain stable for the rest of the year," Peng told investors and reporters in an earnings call.

On NAR's watch list, chip companies also performed well and together generated 4% more in sales in January from a year ago.

However, MediaTek, the largest mobile chip provider to China, saw sales drop more than 14% from a year ago.

Vice Chairman Hsieh Ching-Jiang warned at the end of January of a deceleration in global consumer electronic demand in the current quarter. He said he did not expect to see a repetition of the robust growth momentum in 2016.

Nikkei staff writer Chien Chia-hung contributed to this report.

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