Global PC vendors are likely to face inventory impairment losses in the first quarter of next year, because of overbooking of key components amid a supply shortage, analysts said.

¡°The market demand for notebooks is flat. The strong orders for components from PC vendors last quarter and this quarter could lead to inventory correction at the beginning of next year,¡± International Data Corp Taiwan branch research director Helen Chiang (½­·¼í) told the Taipei Times.

The current components shortages include twisted nematic (TN) LCD panels used in mid-end notebooks, NAND flash and optical disk drives, Chiang said.

PRODUCTION CUTS

Chiang said that none of the component shortages was due to market demand, but rather because of panel makers¡¯ decisions to reduce production and NAND flash suppliers allocating their capacity for smartphones use.

Taipei-based research house TrendForce Corp (¼¯°î¿Æ¼¼) forecast a shortfall of 6 percent in global TN LCD panel supply, or 8 million units, compared with last year¡¯s 164 million units, following Samsung Electronics Co¡¯s production cuts.

Eric Chiou (ÇñÓî±ò), a senior research director of WitsView, a division of TrendForce, said that major PC vendors have been fighting to secure supplies of flat panels and other key components to ensure smooth shipments over the holiday season, fearing that a supply disruption could affect their overall operations and market share.

¡°PC vendors were forced to order whatever was available in the supply chain despite flat demand,¡± Chiang said.

However, this inventory of high-priced key components will become a financial burden next quarter, when the industry enters its slow season, Chiang said.

INVENTORY CONTROL

An industry source who declined to be named said that inventory at Lenovo Group Ltd (“Ïë) is higher than at its peers, while Asustek Computer Inc (ÈA´T) and Acer Inc (ºê³ž) have theirs under control.

Yuanta Securities Investment Consulting Co (Ôª´óͶî™) analyst Vincent Chen (êØN·á) agreed, saying he was not ¡°too¡± worried about potential inventory correction at Asustek and Acer, because both companies have been cautious in managing their inventories.

However, Chen said the component shortages could exert downward pressure on Asustek¡¯s and Acer¡¯s margins this and next quarter due to higher costs.

Asustek and Acer yesterday told the Taipei Times that their notebook inventory levels are healthy.

Asustek said it is to reduce its mid to low-end notebook shipments and focus on its higher-margin products this quarter to control its inventory and maintain its profitability amid rising components costs.

By: DocMemory
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