Optimism But…
Asustek (2357.TT) is among the top 10 monitor producers globally, and as such has benefited from the strong demand for same as the COVID-19 pandemic forced a massive portion of the global population to remain indoors. This can be seen in y/y increases the company has seen over the last few months in their sales figures. The company is expecting to ship 7m monitors this year up 12.9% y/y and in that mix they expect to increase the number of gaming monitors from 2m last year to 3m this year, and expects global monitor shipments to increase from 139m, last year to 150m this year, an increase of 7.9% y/y, with gaming monitor shipments increasing 33.3% from 15m to 20m.
There was a qualifier on those estimates which was “barring the shortages of IC chips”, and a 2nd qualifier on 2nd quarter results which stated that, “due to the shortage of some key materials”, shipments of traditional and gaming monitors will stay flat in the quarter. Given that the company reported 36.5m in April Sales, a flat quarter would entail the next two months being $35.8m each, and while these are still very positive results, it would imply that June could be a down month y/y. This is an issue that plagues many companies in the CE space who are now facing shortages and much harder y/y comparisons, and while we emphasize that results such as these are still quite strong, unless component shortages go away in the 2nd half, the comparisons will continue to get harder, and even more so in 1Q of next year.
Make what you will with the data, but even with continued demand strength, it seems that the high growth rates seen over the last year or so will be much harder to achieve in 2H, and given that there is little additional available semiconductor capacity coming on line in the next few months, the only way component shortages will ease would be against lower demand. We expect stockpiling components has been part of the demand picture, which could slow and ease some demand related shortages, but if that stocking was actually ‘phantom demand’, the real growth rates in CE would become apparent, and they would likely lead to the weak comparisons mentioned above. While we expect a less extreme scenario, we have to consider what we see on a day-to-day basis, and without seeming all ‘doom and gloom’ are a bit more cautious toward the CE space than a quarter ago, despite the strong 1Q numbers. JOHO.
There was a qualifier on those estimates which was “barring the shortages of IC chips”, and a 2nd qualifier on 2nd quarter results which stated that, “due to the shortage of some key materials”, shipments of traditional and gaming monitors will stay flat in the quarter. Given that the company reported 36.5m in April Sales, a flat quarter would entail the next two months being $35.8m each, and while these are still very positive results, it would imply that June could be a down month y/y. This is an issue that plagues many companies in the CE space who are now facing shortages and much harder y/y comparisons, and while we emphasize that results such as these are still quite strong, unless component shortages go away in the 2nd half, the comparisons will continue to get harder, and even more so in 1Q of next year.
Make what you will with the data, but even with continued demand strength, it seems that the high growth rates seen over the last year or so will be much harder to achieve in 2H, and given that there is little additional available semiconductor capacity coming on line in the next few months, the only way component shortages will ease would be against lower demand. We expect stockpiling components has been part of the demand picture, which could slow and ease some demand related shortages, but if that stocking was actually ‘phantom demand’, the real growth rates in CE would become apparent, and they would likely lead to the weak comparisons mentioned above. While we expect a less extreme scenario, we have to consider what we see on a day-to-day basis, and without seeming all ‘doom and gloom’ are a bit more cautious toward the CE space than a quarter ago, despite the strong 1Q numbers. JOHO.
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