Asian electronics makers are forecasting a turnaround in the second half of this year, citing a pick-up in global demand.
Several companies say the worst is over for a sector at the heart of emerging Asia's battered, export-reliant economies -- from Thailand to Singapore, Malaysia and Taiwan.
“I think the weakness in electronic component demand has hit bottom in the second quarter because new orders are now increasing,” Anusorn Muttaraid, director of Thailand's Delta Electronics, told Reuters.
Delta, 24% owned by Taiwan's Delta Electronics Inc, expects dollar sales to rise 11.7% in 2009, a rebound from just 1% growth in 2008, he said.
In Taiwan, Hon Hai Precision Co Ltd, the world's largest electronics contract maker, is aiming for revenue to grow by 30% this year as increasing numbers of companies cut costs through outsourcing rather than maintaining their own labor-intensive production lines.
Other electronics manufacturers offer similarly bullish forecasts. Taiwanese contract laptop PC maker Compal Electronics Inc is revising up its forecast for total global PC shipments this year.
Compal and crosstown rival Quanta Computer Inc together manufacture more than half of the world's laptop PCs, and their forecasts are usually closely watched as an indicator to the overall health of the sector.
In Japan, industry data released on Wednesday showed orders for Japanese equipment used to make semiconductors outpaced sales for the fourth straight month in July as the chip sector inches out of its worst-ever downturn.
In South Korea, shares in Hynix Semiconductor, the world's second-biggest maker of memory chips, jumped nearly 4% on Wednesday on rising chip prices.
Hanwha Securities analyst Seo Do-won expects Hynix to report a modest operating profit for the current quarter following many quarters of losses.
And in Malaysia, Unisem, which owns manufacturing plants in Malaysia, Indonesia, China and Europe, said last month it expected sales to grow 10%-15% in the third quarter from the second as customers replenish inventories.
Malaysian Pacific Industries (MPI), another contract electronics maker, is expected to report a smaller quarterly loss for the April-June quarter later on Wednesday, helped by higher sales, analysts said.
The gains have started to show up in some trade data. On Monday, Singapore reported the smallest drop in electronics exports in four months. Electronics shipments dropped 14.5% in July from a year earlier, after falls of 21.6% in June, 21.8% in May and 25.6% in April.
“The days of collapsing global demand seem to be fading in the rear view window,” said Vishnu Varathan, an economist at 4CAST, a market research firm.
There are also anecdotal signs of a pick-up. Delta and other Thai electronics firms such as the local unit of hard-disk drive maker Western Digital have started hiring staff again in recent months to meet an increase in orders from clients.
Delta, which produces power supply equipment used in telecommunications and computer products, planned to bring its workforce back to normal levels after cutting it to about 9,000 from 11,000, Anusorn said.
Its main clients include IBM and Nokia.
But some express caution, raising questions over whether demand is sustainable and highlighting the slow pace of the global economic recovery.
“We have to monitor whether demand is growing through next year or it's just only because their clients want to replenish their inventories,” said Adithep Vanabriksha, deputy chief investment officer of Aberdeen Asset Management in Bangkok, which manages $676 million in Thai assets.
Since the end of the second quarter, Delta shares have shot up 25%, outperforming a 5.7% gain in the overall Thai stock market. Unisem shares increased 25% over the same period, while MPI rose 16% in the Kuala Lumpur market, where the main index was up nearly 8%. (Reuters)