Computex ushers in new optimism for PC industry

By Doug Young



Reuters

TAIPEI: An unfamiliar sound hummed around the hundreds of booths at the Computex PC show in Taipei this week: the buzz of people optimistic about their business.

After two years of falling sales and steady losses, nearly all the exhibitors interviewed by Reuters bubbled about their fourth-quarter outlook. Some said sales in the key holiday season would be up as much as 40 percent from a year ago.

The industry has a history of making upbeat forecasts and failing to deliver. But regular attendees of the show, the third largest of its kind in the world, sensed a more certain confidence.

"It was a little scary that everyone was saying positive things," said Henry King, a Goldman Sachs computer analyst who visits the show every year.

"No one was negative. I've talked to the exhibitors and they're all saying good things across the board, from hardware to communications to consumer. They're all positive about the fourth quarter."

The mood in Taiwan is a good benchmark for the global computer industry because the island's contract manufacturers work for leading companies such as Hewlett-Packard and Dell and make most of the world's laptop PCs.

Leading the pack in its bullish outlook at Computex was computer bellwether Acer, which said the notebook shipments that make up two-thirds of its revenues could rise 30-40 percent in the fourth quarter.

"The economy is much better this year," Campbell Kan, chief of Acer's notebook product line, told Reuters in an interview. "Acer's growth has also been better than the industry average."

PRODUCTION LINES HUM

Spirits were equally upbeat at Micro-Star International Co Ltd, Taiwan's second-largest maker of motherboards that hold a computer's basic circuitry and components.

As usual for the time of year, its production lines are booked solid through December, said Fion Meng, an account manager in the multimedia sales department. The difference this time around is that the company has increased capacity by around a quarter.

"In August we probably had 80-90 percent of our capacity booked," she said. "For the fourth quarter, we're hopeful the orders will be better."

The upbeat mood was hardly a given before the show, which was postponed from June because of the SARS outbreak.

Many vendors said their product launches took place at the usual time earlier in the year, and that this year's show was more an occasion to show off their new products than to win new business.

Despite the shift, however, show organisers said the number of vendors grew to 1,241 from 1,108 last year, while attendance, previously forecast to be as low as 15,000, was expected to come close to matching last year's 24,378.

Vendors both big and small appeared to share in the optimism, with many crediting a new crop of audio and video products for renewed consumer and business interest.

"Demand is increasing in the fourth quarter," said Danny Chen, sales and marketing senior manager of Atoz Technology (Taiwan) Inc, which was showing off a mini PC it claimed was the smallest and lightest in the world.

"Sales should be much better -- maybe up 20 to 30 percent."

The mood was equally upbeat among buyers.

"For the moment it's looking very good," said Luc Destray, sales and marketing manager for Belgium-based Dectel Online, a distributor of handheld computers and cellphones.

"Belgium was very quiet at the start of the third quarter. Since then, it's really coming up for orders and demand."

© Reuters