Compal president expects PC demand to return growth in …

Compal Electronics president Ray Chen expects PC demand to return to growth in 2017 because of a replacement trend from the enterprise sector created by Microsoft ending support for Windows 7. Demand from the consumer sector will have slower growth, but will happen eventually and demand from Europe has already started picking up.

Compal expects its PC shipments to reach around 40 million units in 2017, up 10% on year, better than the market average.

As for key component shortages, panel and DRAM supply is still tight in the second quarter, but the situation is much better than previously. Compal expects the two components’ shortages to be resolved in the third quarter; however, solid state drive (SSD) shortages will persist into 2018 because of yield rate and capacity issues.

Although demand for tablet is dropping, Compal continues to see increased share in the tablet market thanks to orders from its US-based client and its smartphone and tablet orders from the vendor for the second quarter are expected to rise 50% sequentially.

Compal also announced first-quarter consolidated revenues of NT$187.43 billion (US$6.23 billion), down 15% sequentially, but up 6% on year thanks to rising PC shipments. In the quarter, the ODM achieved net profits of NT$1.11 billion and EPS of NT$0.25.

The company’s first-quarter net profits were down sharply both sequentially and on-year because of currency exchange losses and its bad debt from LeEco. Compal declared operating expenses of NT$4.88 billion for the first quarter with NT$688 million generated by LeEco’s bad debt. The company also declared exchange losses for NT$1.64 billion in the first quarter.

Chen pointed out that Taiwan currency is still on the rise in the second quarter, but he believes the exchange rate against the US dollar will stay at around NT$30.

As for LeEco, Compal noted that the China-based vendor is currently paying their debt regularly and their account receivable’s amount dropped from NT$8.2 billion originally to only NT$4 billion in the first quarter.

Compal also participated in a fund raiser of LeEco’s subsidiary and invested CNY700 million (US$101.52 million) to acquire a 2.15% stake in the subsidiary. LeEco also promised to merge the subsidiary into the parent company by the end of 2019.

For now, LeEco and Compal’s partnership is mainly over smartphone manufacturing and the two sides have not yet come out with a new product plan.

Categories: ICT manufacturing IT + CE PC, CE

Tags: 2017 Compal Compal Electronics demand Europe Microsoft PC president Ray Chen shipments Windows Windows 7

Companies: Compal Electronics

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