The Chinese government is expected to have a positive impact on the performance of Taiwanese IT companies for the time being by doubling the scale of the domestic demand stimulation policy. Despite uncertainties such as the so-called 'Trump tariffs,' it is anticipated that a more definite recovery trend in IT demand will be confirmed after March.
On the 11th, Chaemin-sook, Park Sang-hyun, Hwang Jun-tae, and Hong Ye-rim, researchers at Korea Investment & Securities, stated in their report titled "March Taiwan IT: Is Spring Coming?" that "Despite February being a seasonal off-season, Taiwanese companies showed relatively favorable performance."
First, they noted that "amid steady demand for artificial intelligence (AI) servers, sales growth in smartphone-related companies is noticeable." The report pointed out, "The combined sales of the server value chain continued double-digit (%) growth compared to the previous year," and added, "Notably, sales growth was observed not only in servers but also in PC ODM (Original Design Manufacturer), channel-oriented memory companies, and the smartphone value chain compared to the previous month and the same period last year."
This is presumed to be the effect of the domestic demand stimulation policy, which led to the depletion of some set inventories and an increase in build demand. It was also analyzed that the advance build demand to maximize shipments before tariff imposition likely contributed to the sales increase. The report forecasted, "Such policy effects will positively influence the performance of Taiwanese companies for the time being."
Specifically, in semiconductors, steady server sales and channel price rebound effects were confirmed. TSMC's February sales amounted to 260 billion Taiwan dollars, a 43% increase year-on-year but an 11.3% decrease month-on-month. Researchers Chaemin-sook and Hwang Jun-tae explained, "Considering that TSMC's February sales are usually lower than January's, this is a seasonal factor." Sales of server value chain companies Aspeed and Wiwynn increased by 109% and 91% year-on-year, respectively, and the combined sales of four ODM companies also rose by 44%, marking eleven consecutive months of double-digit growth.
In the electrical and electronics sector, signals of smartphone recovery were detected. Nanya PCB, which had recorded poor performance for two years, saw its February sales grow nearly 50% year-on-year. Researchers Park Sang-hyun and Hong Ye-rim explained, "The domestic demand stimulation policy implemented from January 20th promoted smartphone consumption centered on the Chinese domestic market," adding, "Besides the substrate industry, smartphone-related parts also showed generally good performance in February." Additionally, Foxconn, which has been growing mainly in AI servers, showed the highest growth in the smartphone sector both month-on-month and year-on-year in February.
The tariff policy of the Donald Trump administration is considered a risk factor for annual IT hardware demand. However, the report evaluated, "The movement to increase manufacturing and shipments before the official enforcement of the tariff policy can ultimately accelerate the depletion of set and component inventories, which remains positive."
Directly, the performance improvement of set companies such as smartphones, home appliances, and PCs is expected to appear the fastest. The report stated, "For component companies with relatively high inventory levels, such as memory, the policy effect may not be as significant as for sets, but the expectation of inventory depletion could bring forward the timing of price increases, which is also positive," and forecasted, "This expectation will be more clearly confirmed in March."
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