{"id":360563,"date":"2020-07-20T07:09:15","date_gmt":"2020-07-20T05:09:15","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=360563"},"modified":"2020-07-20T07:11:32","modified_gmt":"2020-07-20T05:11:32","slug":"tech-sales-jump-could-be-short-lived","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/technology\/360563-tech-sales-jump-could-be-short-lived.html","title":{"rendered":"Tech sales jump could be short-lived"},"content":{"rendered":"

By Tim Culpan<\/em><\/p>\n

I\u00a0wrote about a set of data<\/a>\u00a0<\/strong>in late May that\u00a0portended a rebound in the tech sector. Now, I think some pain may ensue.<\/p>\n

Specifically, I drew on Taiwan monthly sales, which listed companies are required to report.<\/p>\n

This information is unique because it\u2019s one of the few sets of data globally that gives visibility into the sector before quarterly numbers are released.<\/p>\n

The figures\u00a0pointed to a revenue bounce, which occurred last month.<\/p>\n

These\u00a0same data for June showed that\u00a0semiconductor makers posted an aggregate 27% rise in sales from the previous year, while the category of electronics products distribution climbed an aggregate 10.7%.<\/p>\n

Companies in electric machinery, electrical and cable, optoelectronics, and\u00a0computer and peripherals all posted their best month\u00a0this year.<\/p>\n

But the data also\u00a0suggest\u00a0we\u2019ve experienced more of a June Jump than a sustained recovery. Further, it appears limited to only a slice of the\u00a0hardware sector \u2014\u00a0chips\u00a0and\u00a0PC products.<\/p>\n

A category of Taiwan corporate sales data called other electronics \u2014\u00a0which includes Foxconn\u2019s Hon Hai Precision Industry Co. \u2014\u00a0is still down 3.4% for the year.<\/p>\n

Furthermore, that grouping has recorded only two positive months out of six \u2014\u00a0April and May. June data were\u00a0as bad as March, when Covid-19 really sent the global economy into a tailspin.<\/p>\n

There are a\u00a0number of caveats to the corporate sales\u00a0data\u00a0and the analysis that results from it, namely that they\u00a0cover\u00a0only\u00a0Taiwan and are\u00a0specifically related to hardware.<\/p>\n

Still, the outsize depth and breadth of Taiwanese companies in the global supply chain allows us to track trends.<\/p>\n

According to Taiwan Semiconductor Manufacturing Co., the largest contract chip manufacturer, demand for its products is being driven by 5G networks and smartphones, plus\u00a0high-performance computing, such as artificial intelligence and graphics chips.<\/p>\n

Digging into the computer and peripherals category, we can see more clearly what\u2019s going on.<\/p>\n

This subset is dominated by\u00a0Quanta Computer Inc. and Compal Electronics Inc. \u2014\u00a0the world\u2019s two largest laptop makers.<\/p>\n

Yet bigger contributions to growth come from lesser names like Gigabyte Technology Co. and Micro-Star International Co., which make motherboards \u2014\u00a0those green platters of plastic to which components are soldered.<\/p>\n

High-end gaming laptops and corporate servers are major uses of the motherboards produced by these companies \u2014\u00a0which gel\u00a0with the demand for graphics and AI chips being churned out by TSMC.<\/p>\n

These\u00a0niches are enjoying a resurgence thanks to the stay-at-home trend driven by the pandemic.<\/p>\n

We can see that outside of these specific product categories, the bigger drivers of demand, such as smartphones, still look\u00a0weak.<\/p>\n

Upticks in March and June indicate a post-lockdown resumption of supply,\u00a0and a\u00a0burst in orders as the world settles in for sustained impact from Covid-19.<\/p>\n

The broader rollout of new\u00a0telecom networks, which happens every eight to 10 years, helps offset this global weakness but doesn\u2019t remove it.<\/p>\n

That means that it\u2019s a dangerous bet to believe in wholesale resumption of demand, because macro-economic headwinds are likely to catch up with this short-term shot in the arm that tech has experienced.<\/p>\n

The \u201cother electronics\u201d category \u2014\u00a0a catchall for companies that make everything from smartphones and\u00a0home electronics to\u00a0modules and internet devices \u2014\u00a0remains weak.<\/p>\n

Lack of growth here,\u00a0declining 6.9% year-to-date,\u00a0points to a broader trend of tech companies suffering from the downturn and missing out on pandemic-specific demand. This is the sub-sector you\u2019d want to see improve before declaring\u00a0a recovery.<\/p>\n

For sure, that June Jump looks exciting. But investors should brace for disappointment over the coming six months.<\/p>\n

Now read: Big growth in global PC shipments due to COVID-19<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"

Tech sales data suggest\u00a0we\u2019ve experienced more of a June Jump than a sustained recovery. Further, it appears limited to only a slice of the\u00a0hardware sector \u2014\u00a0chips\u00a0and\u00a0PC products.<\/p>\n","protected":false},"author":341034,"featured_media":321690,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[17],"tags":[19023,43124,65731],"class_list":["post-360563","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-pc-sales","tag-taiwan-semiconductor-manufacturing-company-tsmc","tag-tech-sales"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/360563"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=360563"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/360563\/revisions"}],"predecessor-version":[{"id":360567,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/360563\/revisions\/360567"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/321690"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=360563"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=360563"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=360563"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}