During a conference call summarizing February's unit shipments from a number of Taiwanese motherboard and notebook PC manufacturers, Merrill Lynch analysts said the shipments declined from the previous month. They also said the number of units shipped in the quarter should dip about five percent from the fourth quarter--only slightly more than the usual seasonal dip. In historical terms, it's far better than the searing slides of a year ago.
The numbers are important because an overwhelming percentage of products made on the island are shipped to North America and Europe under brand names such as Hewlett-Packard and Dell Computer. If the Taiwanese manufacturers, such as computer maker Quanta or motherboard maker AsusTech, are having a good month or quarter, it's an indication that the same holds true for the more well-known PC makers.
Still, although the market has stabilized, the calm rests on a thin foundation. Merrill Lynch analysts Steve Fortuna and Tony Tseng described manufacturers in Taiwan, who normally have a backlog of orders, as living order to order without great demand for PCs. Manufacturers have been filling orders for notebook PCs in as few as five days, he said. Consumers and businesses also appear to lack a compelling reason to upgrade PCs, the analysts said.
Motherboard unit shipments fell 16 percent from January. Merrill had forecasted a 14 percent decline. Notebook shipments were down 6 percent, which bested Merrill's forecast of a 12 percent drop but was worse than the historic trend of a 9 percent rise in units shipped.
Total unit shipments for the month fell 15 percent from January, compared with Merrill's forecast of a 13 percent decline. The historic trend for February is a 4 percent increase in total unit shipments.
Merrill predicts March will see motherboard unit shipments rise by 17 percent sequentially, compared with a historic increase of 25 percent to 27 percent. Notebook shipments, the firm predicts, will increase by 20 percent, compared with a historical 40 percent increase.
Total unit shipments, Merrill predicted, will increase by 18 percent sequentially for the month, falling short of the historical 25 percent to 28 percent jump.
While February and March look weak, an 11 percent increase in January unit shipments should prop up quarterly results. Merrill predicts total first-quarter unit shipments in Taiwan will come close to meeting historic trends.
"We are now thinking that...the first quarter will be down about 5 percent in aggregate in terms of units," Fortuna said. That figure is "slightly off normal seasonality" for the first quarter, in which units historically drop by 3 percent from the fourth quarter of the preceding year.
Looking ahead to the second quarter, Merrill expects a 10 percent sequential decline in motherboard shipments and a 5 percent to 10 percent sequential increase in notebook shipments.
"That would suggest that numbers out of Taiwan would be down about 5 percent" for the second quarter, Fortuna said. "There really aren't a lot of demand drivers in the first half."
However, Taiwanese manufacturers, like many PC makers, are expecting a strong performance in the second half of the year.
"They believe we're going to see some recovery in the U.S. economy in the second half, and that will drive PC demand," Fortuna said.