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Taiwan tech tracker

Taiwan tech revenue grows 3.9% amid trade war uncertainty

Apple assemblers boosted by rival products as hopes rise for US-China talks

Non-Apple products boosted the fortunes of key Taiwanese suppliers to the U.S. giant.    © Reuters

TAIPEI -- Major Taiwanese tech companies wrapped up an eventful but better-than-expected month in June, logging modest revenue growth despite the trade war uncertainty that continues to loom over the outlook for the second half of 2019.

Each month the Nikkei Asian Review tracks the revenue of 19 Taiwanese tech suppliers, whose clients range from hardware giants Apple, Huawei, HP, Dell and Cisco, to internet companies such as Amazon and Google, and even electric vehicle maker Tesla and telecom equipment builders Nokia and Ericsson. Key findings for the month are presented below in an easy-to-digest, graphics-led format.

In June, total revenue for the 19 companies monitored by the Nikkei advanced 3.9% on the year to $948.28 billion New Taiwan dollars ($30.54 billion). That represents a slowdown from 6.25% in May and 7.48% in April.

Revenue growth of the first half of 2019 was also greater than 3% on the year, an indication of the resilience of the global tech industry.

Four of the 19 tech companies tracked by the Nikkei Asian Review are key Apple assemblers for products ranging from iPhones and iPads to MacBooks. Amid the lingering trade war uncertainties, the four suppliers all saw their quarterly revenue rise on the year -- but that growth was driven mainly by non-Apple products.

Key iPhone assembler Hon Hai Precision Industry, better known as Foxconn Technology Group, saw its revenue in the April-June quarter rise 7.51% from the same time a year ago. Foxconn, which also makes smartphones for Huawei Technologies and servers for HP and Dell, attributed the growth momentum to its communication and computing products, which generally refers to networking devices, servers and personal computers. At Pegatron, a smaller rival to Foxconn, quarterly revenue increased nearly 10% from a year ago, fueled by steady demand for networking devices, game consoles and notebook computers.

MacBook and Apple Watch Quanta Computer, which is also a key assembler of HP notebooks and servers for Amazon, Facebook and Google, logged revenue growth of 20% for the quarter, mainly supported by continued demand for servers used in artificial intelligence-backed data centers. Likewise, iPad maker Compal Electronics' revenue growth of 6% was driven not only by the new iPad launch, but also by robust demand for notebooks.

Although quarterly revenue grew at the four assemblers, they all acknowledged concern over the possibility of the trade war affecting the traditional peak sales season for electronics devices in the second half of the year. This is despite the better-than-expected outcome of the G-20 summit in Osaka, at which the U.S. and China agreed to resume trade talks. Trade representatives from the two sides are expected to restart talks later this week.

Delta Electronics, a leading thermal solutions and power component supplier to Apple and Tesla, saw its monthly revenue surge more than 20% for three consecutive months through June. The sudden improvement is mainly attributable to the fact that Delta completed its acquisition of affiliate Delta Electronics (Thailand) and began to incorporate its revenue in April.

Delta was one of the first Taiwanese tech suppliers to start diversifying in order to mitigate any fallout from the trade war. Last August the company announced it had made a tender offer to acquire DET, in which it then had a 20% stake but no board seats, in order to gain access to the Thailand-based company's non-China manufacturing facilities. The announcement came as the first wave of punitive U.S. tariffs on $34 billion worth of Chinese goods was already hitting Delta's exports from the country.

After the acquisition was completed at the end of March, Delta said it had more flexibility to leverage DET's facilities in Thailand, India and Slovakia to export to the U.S. and Europe from locations outside of China.

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