Taiwan ODMs_ Mild 4Q rev upsides across PC_servers; Blackwell ramp behind track. Sun Jan 12 2025

Summary of Taiwan ODMs Conference Call Industry Overview - The conference call focused on the Taiwan ODMs/OEMs sector, particularly in the PC and server markets, highlighting revenue performance and future expectations for 4Q24 and 1Q25 [2][5]. Key Points PC Market Insights - 4Q24 Performance: Taiwan ODMs reported better-than-expected server revenue but mixed results in PC revenue. PC brand revenue fell short of market expectations due to weak end demand [2][5]. - 1Q25 Outlook: The notebook ODM build is expected to be slightly above seasonal trends with a forecasted decline of 12% QoQ. However, PC brands anticipate YoY growth driven by a new product cycle [2][5]. - Shipments: 4Q24 shipments for motherboards and VGA were in line with estimates, with expectations for a strong sequential uptick in VGA shipments in 1H25 due to Nvidia's RTX50 series [2][5]. Server Market Insights - General Server Demand: There was resilient demand for general servers, with AWS AI ASIC revenue increasing in 4Q24. However, the transition to Blackwell servers negatively impacted GPU server ODM/OEM revenues [2][5]. - Revenue Expectations: Wiwynn is favored for its continued ASIC project ramp-up and potential GPU earnings contribution. Quanta and Hon Hai are preferred for their strong positioning in future-generation Nvidia AI servers [2][5]. Company-Specific Performance - iPhone Revenue: iPhone revenue was weaker than expected, particularly for non-Pro models, indicating sluggish demand [2][5]. - Company Preferences: For non-server segments, ASUSTek and Lenovo are preferred due to new gaming product cycles and anticipated PC recovery. ASMedia and Realtek are expected to benefit from above-seasonal PC semiconductors momentum in 1Q25 [2][5]. Financial Data Highlights - PC Brands Performance: - Asus: 4Q24 revenue down 10% QoQ, up 25% YoY - Acer: 4Q24 revenue down 9% QoQ, up 5% YoY - MSI: 4Q24 revenue down 1% QoQ, up 5% YoY - Gigabyte: 4Q24 revenue down 7% QoQ, up 44% YoY [7]. - Notebook ODMs Performance: - Wistron: 4Q24 revenue up 9% QoQ, up 29% YoY - Compal: 4Q24 revenue down 6% QoQ, down 5% YoY - Inventec: 4Q24 revenue up 21% QoQ, up 54% YoY [7]. Future Guidance - 1Q25 Guidance Changes: - Wistron: <10% QoQ decline (previously teens % decline) - Compal: <10% QoQ decline (previously likely above seasonal trend) - Inventec: ~20% QoQ decline (previously double-digit decline) - Pegatron: Down teens % QoQ (previously single-digit decline) [11]. Additional Insights - Gaming Cycle: The launch of Nvidia's RTX series is expected to drive motherboard and VGA sales momentum in 1H25, with ASUSTek and MSI projected to grow revenues by 16% and 18% YoY, respectively [10]. - iPhone EMS: Seasonal declines are expected in 1Q25, but a new SE model launch is anticipated [10]. Conclusion The Taiwan ODMs sector is experiencing mixed results with a cautious outlook for 1Q25, particularly in the PC market. However, there are positive signals in the server segment and potential growth driven by new product cycles in gaming and AI servers.