03.21.2001
Askey has its work cut out in 2001

• Askey Computer (2366 'Ya Xu') has secured an ADSL outsourcing order from Dell. The shipment, of undisclosed quantity, is expected to start in March.

• Last year, Askey was the top ADSL maker in Taiwan, with production of 410,000 units. The company expects to make 1m cable modems and 1.8m ADSL modems in 2001.

• Global demand for cable modems has been slow due to cable operators' inventory backlog. Inventory completion will take 4-6 months. Cable modem prices are widely predicted to fall 10-15% in 1H01, and we expect prices to decline another 10% in 2H01.

• ADSL modem prices are not faring much better, especially following Chunghwa Telecom's (2412 'Chung Hua Dian') ADSL outsourcing contract awarded to Ambit at a very low unit price. Since broadband products contribute over 90% of revenue, we see Askey facing a difficult 2001.

• Askey will set up production facilities in China in 2H01. This will help cut costs, but benefits will not be seen until 2002.

• We would advise caution on Askey until a clearer picture emerges.

BennyLo@Primasia.com +886-[0]2-2547-8869