Electronics makers positive on Christmas outlook
TAIPEI (Reuters) — Consumer electronics makers are expecting a healthy dose of cheer for the upcoming Christmas season, fueled by improving consumer sentiment and a bevy of new gadgets drawing on the growing power of computers and broadband Internet.
The optimistic air at Computex, the world's third-largest computer trade show taking place this week in Taipei, contrasts sharply with last year when sales ranged from flat to marginally higher for many western retailers.
A stabilising employment picture in the United States is helping boost consumer confidence in the run-up to this year's holiday season, said Tom Engibous, chief executive of the world's largest cell phone chipmaker Texas Instruments.
In a nod to the U.S. economy's building strength, Texas Instruments earlier this month gave out new guidance for its third quarter, narrowing its expected revenue range to the high end of previous forecasts on strong demand for its semiconductor products that power cell phones and other consumer electronics.
"You have to believe the consumer is going to feel better (about Christmas) this year than last," said Engibous, speaking to reporters on the sidelines of Computex.
Many exhibitors at the show, held much closer to Christmas this year after the usual event in June was postponed due to the SARS outbreak, forecast sales growth of 10% or more this holiday season on the strength of a crop of new products.
Many of those were on display, drawing on the growing muscle of powerful memory chips that run applications and broadband that allows for the transfer of data at millions of bytes per second.
Recordable DVDs
One group of products that had vendors buzzing was a new crop of DVD recorders, whose rapidly dropping prices have led many to predict the medium will soon replace videocassettes.
Ritek Corp, the world's largest maker of recordable CDs, expects its revenue to grow by about 15% in the third quarter, when most Christmas orders are placed, said Eric Yu, director of sales for the OBM division of the company's North American operation.
Yu said much of his company's growth would come from a recent jump in CD prices as a glut eases, along with exploding demand for recordable DVDs needed for the new generation of affordable recorder-players making its way to market.
"Normally in the third quarter we have to finalize sales for Christmas," Yu said. "Many buyers at this show are coming to finalise orders."
Another company banking on recordable DVD was Ulead Systems, whose software competes with the more high profile Adobe Systems and whose hopes are resting on a new DVD editing product, said Christine Tseng, director of the company's Asia-Pacific marketing and sales centre.
Tseng said Ulead, whose revenue is still a relatively modest $30 million a year, had seen sales grow by 10 to 15% this year, and expected to at least match those gains during the Christmas season.
"DVD burners should drop in price significantly by the end of this year, so that should help a lot," she said. "We've gotten a lot of end-user enquiries. They've wanted to find out what kind of software they can use for DVD editing."
Amid the cheer, however, privately held Feton Technology was less upbeat on the Christmas prospects for its MP3 players, though its reasons were unrelated to holiday demand.
Product Assist Manager Ariel Liao said the industry had been hammered by a global shortage that has seen prices for flash memory chips more than double in recent months.
"I'm not very optimistic about Christmas because the flash IC increased its price, so not many people are buying the product this year," she said.
