Broader USB3.1 up­take forecast to boost growth for Asustek sub­sidiary

The China Post - - LOCAL -

Tai­wanese in­te­grated cir­cuit de­signer ASMe­dia Tech­nol­ogy Inc., a sub­sidiary of com­puter ven­dor Asustek Com­puter Inc., is forecast to ben­e­fit from broader adop­tion of the USB3.1 port and in­creas­ing chipset or­ders.

Sales and earn­ings of ASMe­dia, which de­signs data stor­age con­troller chips, are ex­pected to in­crease, with com­pound an­nual growth rates of 68 per­cent and 94 per­cent, re­spec­tively, from 2014 to 2017, ac­cord­ing to a U.S.-based bro­ker­age.

The growth will be driven by ris­ing adop­tion of USB3.1/Type-C con­nec­tor stan­dard and chipset or­ders from Ad­vanced Mi­cro De­vices Inc. ( AMD), “with ASMe­dia lever­ag­ing its tech­nol­ogy lead­er­ship, strong IP port­fo­lios, solid cus­tomer re­la­tion­ships and com­pet­i­tive cost struc­ture,” the bro­ker­age wrote in a June 25 note to clients.

The U.S.-based bro­ker­age said it is the only bro­ker to cover AS- Media and it gave an ini­tial rat­ing of “buy” on the stock, with a price tar­get of NT$400 (US$12.92) — nearly dou­ble ASMe­dia’s clos­ing price of NT$217.5 on Fri­day.

Un­der Tai­wanese reg­u­la­tions, the name of the bro­ker­age can­not be re­ported be­cause it of­fers spe­cific fore­casts that could in­flu­ence the mar­ket.

The bro­ker­age said it ex­pects AMD to buy 6 mil­lion chipsets in 2016 and 12 mil­lion chipsets in 2017 from ASMe­dia af­ter the com­pa­nies an­nounced an en­hanced part­ner­ship in late 2014.

On the other hand, the adop­tion rate of USB3.1, which transmits data at 10 gi­ga­bits per sec­ond (Gbps) com­pared with UBS3.0’s 5Gbps, could rise to 3 per­cent in 2015 and 15 per­cent in 2016 from zero in 2014, thanks to spec­i­fi­ca­tion up­grades among In­tel Corp.’s Sky­lake chipset plat­form and moth­er­board brands like Asustek and Mi­cro-Star In­ter­na­tional Co. (MSI), the bro­ker­age said.

The bro­ker­age forecast

that ASMe­dia, as a lead­ing USB3.1 IC sup­plier, will in­crease its USB3.1 so­lu­tion sales by 302 per­cent yearon-year in 2016, ac­count­ing for 45 per­cent of its to­tal sales com­pared with zero in 2014, along with a higher gross profit mar­gin.

ASMe­dia, which listed on the Tai­wan Stock Ex­change in De­cem­ber 2012, re­ported con­sol­i­dated rev­enue of NT$585.42 mil­lion in the first five months of 2015, a de­cline of 11 per­cent from the same pe­riod of last year.

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