Taiwanese manufacturers of liquid crystal displays and personal computers are not likely to be threatened by the expansion of China’s technology supply chain in the near future, according to a Japanese brokerage firm. The Japanese brokerage had recently visited Malaysia, for a one day tour during which they discussed the possibility of China posing a threat to the Taiwanese PC and LCD industry with investors. The topic was discussed with clients of the brokerage on June 8 in a note.
The brokerage is convinced that the PC market is not attracting Chinese competition and Taiwanese manufacturers already have a lightweight cost structure and the market is ex-growth hence Chinese businesses may not be attracted to the Taiwanese PC supply chain. Due to this and other factors they don’t foresee China as a strong threat to the Taiwanese PC business.
Due to regulations the brokerage company’s name cannot be divulged, as it discusses precise market forecasts that may affect the market. The brokerage is of the opinion that though Chinese competition was existent in the market for some time, the Taiwanese were able to preserve their sale prices and margins due to screen sizes distribution and upgrades in features. Due to this protection of their assets, the Taiwanese LCD manufacturers could hold on to their profits over the next three quarters.
The brokerage reserved their buy ratings for flat panel manufacturers in Taiwan. Among these are Quanta Computer Inc., the notebook makers, PC brand Asustek Computer Inc., AU Optronics Corp., Innolux Corp.