03.13.2001
More outsourcing flowing into downstream PC

• It is reported Quanta (2382 'Guang Da') has won additional server orders from TriGem Computer (Korea), following the company's confirmation that it has secured new server orders from US vendors.

• Quanta has declined to comment on the story. On a recent company visit, we were informed that the company will move into low-end server production this year. We estimate non-notebook (NB) PC revenues (including handset, server and IA products) will account for 10% of total sales this year.

• Sharp (Japan) is to deliver OEM orders of TFT-LCD panels used in NB PC to Quanta Display (unlisted), a 31.5%-owned subsidiary of Quanta. Sharp is also a shareholder. Sharp focuses on small-size panels used in handheld devices and LCD TV panels. We believe it will be to Quanta Display's advantage to raise utilization rate and yield in initial mass TFT-LCD production from this year. We predict Quanta Display will make a loss this year and break even next year.

• We continue to recommend ACCUMULATE Quanta on 2001 forecast EPS of NT$5.82. Quanta is an industry leader and is set to gain more market share in the current PC slump.

• First International (2319 'Da Zhong') has obtained a NT$10b consumer desk-top PC order from HP (US) after winning Compaq orders for the same product. The company expects to start shipment at the end of 2Q01. The HP order will generate NT$6.5b in revenue this year. First International's revenue in the first two months was NT$8.3b, up 24% YoY.

• First International has performed favorably when compared with peers like Acer Inc. (2306 ‘Hong Dian’) and Mitac (2315 ‘Shen Da’).

MarthaChen@Primasia.com +886-[0]2-2547-8878