Banc of America notes that their recent checks with several Taiwan motherboard players highlight a seasonal peak in the month of September, with month of October performances ranging from flat or slightly down (Asustek, MSI) to moderately down (Gigabyte). The firm would point out that a number of the motherboard manufacturers saw very solid growth for the months of August and September, and that the current environment suggesting a seasonal slowdown is indicative of a rational response by the PC supply chain to normal seasonal trends.
More importantly, they think recent investor concerns over a weaker than expected Q4 for motherboards is overdone. Specifically, they note the following:
While there has been much focus on recent weakness at Gigabyte, the firm notes that the company is primarily focused on the whitebox/channel market and may not be representative of what the firm believes to be a relatively healthy OEM market.
Importantly, the tone of checks with Asustek - the largest of the motherboard vendors - is not indicative of falling demand or a poorer outlook with regards to Q4. Specifically, they note that Asustek's Oct shipments are on track to mirror Sep levels (5.2M), and that Nov volumes are actually expected to trend higher to 5.5M.
Further, checks with MSI indicate that OEM demand remains strong with OEM demand outstripping supply in some instances (benefiting from Vista-capable mkting efforts). MSI is seeing esp. strong results from Europe, with our sources indicating that the region had already hit 70-80% of shipment forecasts for Q4.
Additionally, the firm would cite healthy Q4 forecasts at recent PC and notebook ODM earnings events at Acer (+20% Q/Q), Quanta (+30% Q/Q), and Compal (+18% Q/Q), respectively.
Notablecalls: Not actionable but good to know. Btw, BofA is positive on INTC, telling investors to add to positions.
More importantly, they think recent investor concerns over a weaker than expected Q4 for motherboards is overdone. Specifically, they note the following:
While there has been much focus on recent weakness at Gigabyte, the firm notes that the company is primarily focused on the whitebox/channel market and may not be representative of what the firm believes to be a relatively healthy OEM market.
Importantly, the tone of checks with Asustek - the largest of the motherboard vendors - is not indicative of falling demand or a poorer outlook with regards to Q4. Specifically, they note that Asustek's Oct shipments are on track to mirror Sep levels (5.2M), and that Nov volumes are actually expected to trend higher to 5.5M.
Further, checks with MSI indicate that OEM demand remains strong with OEM demand outstripping supply in some instances (benefiting from Vista-capable mkting efforts). MSI is seeing esp. strong results from Europe, with our sources indicating that the region had already hit 70-80% of shipment forecasts for Q4.
Additionally, the firm would cite healthy Q4 forecasts at recent PC and notebook ODM earnings events at Acer (+20% Q/Q), Quanta (+30% Q/Q), and Compal (+18% Q/Q), respectively.
Notablecalls: Not actionable but good to know. Btw, BofA is positive on INTC, telling investors to add to positions.
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