Taiwan Hardware & Storage_ Dec-24 NB Shipments Tracked Slightly Higher; 1Q25E Set to See Seasonal Decline

Summary of Taiwan Hardware & Storage Conference Call Industry Overview - The conference call focuses on the Taiwan Hardware & Storage industry, specifically the notebook (NB) shipments for December 2024 and projections for the first quarter of 2025 [1][2][5]. Key Points and Arguments 1. December 2024 Shipments Performance - December 2024 NB shipments increased by 8% month-over-month (m-o-m) and 12% year-over-year (y-o-y), totaling 11.15 million units, which exceeded forecasts by approximately 4% [1][2]. - Overall shipments for Q4 2024 were reported at 31.55 million units, reflecting a decline of 7% quarter-over-quarter (q-o-q) but a growth of 5% y-o-y [1][2]. 2. First Quarter 2025 Expectations - Anticipated decline in 1Q25 shipments by 10% q-o-q and 1% y-o-y, which is better than the typical seasonal decline of 15-20% due to a lower comparison base from 2H24 [2][3]. - Key drivers for growth in 2025 include commercial replacement demand due to the end-of-life (EOL) of Windows 10 in October 2025, a new gaming PC cycle supported by the RTX 50-series GPU launch, and increasing AI PC penetration [2][3]. 3. Performance of Major ODMs - Pegatron showed strong performance in December 2024 with a 20% growth m-o-m and 50% growth y-o-y, driven by the production ramp-up for Microsoft's new Surface Laptop [1][2]. - Inventec also outperformed in 2024 with a 7% shipment growth, attributed to its higher exposure to commercial and gaming products [1][2]. 4. Stock Recommendations - Investors are advised to focus on companies with diversified product portfolios and better growth prospects. Preferred stocks include: - Asus (2357.TW) for improving margins and strong leadership in gaming products [3]. - Quanta (2382.TW), Wistron (3231.TW), Inventec (2356.TW), Delta (2308.TW), and Lotes (3533.TW) for better earnings outlook in 2025 [3]. Additional Important Information - The call highlighted the impact of inventory build-up ahead of the Chinese New Year holidays and upcoming product launches as a reason for the December shipment increase [1][2]. - The overall demand environment is stabilizing, suggesting a cautious optimism for the upcoming quarters [3]. This summary encapsulates the critical insights from the conference call, providing a comprehensive overview of the current state and future expectations of the Taiwan Hardware & Storage industry.