- ThinkEquity's Eric Ross notes the firm returned from a week in Taiwan where they had the opportunity to meet with over 30 companies in the electronic supply chain. As in September, they went to Taiwan to determine if theyshould upgrade our Universe; after much investigation and thought, the firm believes there is little reason to own PC names, as they believe there is little upside to expectations in 2007 (and the potential for an inventory bubble).
PC unit demand is ok (still below seasonality), but all low end. Box demand is ok, but certainly not great. Believes 4Q06 Q/Q unit growth will roughly be 7% vs. 14% for normal seasonality.
Low-end pricing is the ONLY driver. Consumer customers do not seem to be buying anything except for low price. Box makers appear to be hesitating to offer new features such as Blu-Ray in this environment, as they believe they are unlikely to be repaid. Average pricing for desktops is
hovering below $700, and laptops are averaging below $900. Since returning to the U.S., the firm has seen laptops as low as $399, and desktops for $349 (although this is the same price as they saw before, one now can get a color printer included for free). Everyone the firm spoke with believes desktops are weak, and notebooks are strong. Consensus is that notebooks will have grown units 25% in 2006. Desktops may decline slightly Y/Y in units in 2006.
No one they met with believes Vista will be a big driver in 1H07. Even though investors and IR reps alike have inflated Vista as the saviour of the semiconductor industry, everyone the firm spoke with in the Asian supply chain believes it will be a dud. Also, no one even mentioned the Chinese New Year.
Every check they have done suggests that Advanced Micro Devices (NYSE: AMD) is shipping at capacity for the next several quarters (firm believes this could be 18+ million CPUs per quarter).
Notablecalls: This pretty much confirms my pessimistic views regarding the Vista-induced PC demand.
PC unit demand is ok (still below seasonality), but all low end. Box demand is ok, but certainly not great. Believes 4Q06 Q/Q unit growth will roughly be 7% vs. 14% for normal seasonality.
Low-end pricing is the ONLY driver. Consumer customers do not seem to be buying anything except for low price. Box makers appear to be hesitating to offer new features such as Blu-Ray in this environment, as they believe they are unlikely to be repaid. Average pricing for desktops is
hovering below $700, and laptops are averaging below $900. Since returning to the U.S., the firm has seen laptops as low as $399, and desktops for $349 (although this is the same price as they saw before, one now can get a color printer included for free). Everyone the firm spoke with believes desktops are weak, and notebooks are strong. Consensus is that notebooks will have grown units 25% in 2006. Desktops may decline slightly Y/Y in units in 2006.
No one they met with believes Vista will be a big driver in 1H07. Even though investors and IR reps alike have inflated Vista as the saviour of the semiconductor industry, everyone the firm spoke with in the Asian supply chain believes it will be a dud. Also, no one even mentioned the Chinese New Year.
Every check they have done suggests that Advanced Micro Devices (NYSE: AMD) is shipping at capacity for the next several quarters (firm believes this could be 18+ million CPUs per quarter).
Notablecalls: This pretty much confirms my pessimistic views regarding the Vista-induced PC demand.
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