Singapore Technology

Source : JP Morgan

Singapore Technology

Takeaways from JPMorgan Technology Conference. Singapore Tech

We attended the 34th Annual JPMorgan Tech Conference in San Francisco. Our key takeaways and implication for stocks include • Tech companies continue to generate a lot of cash and are flush with cash pretty similar to companies like Venture, GES, MFS, Hi-P and Unisteel which also generate a lot of cash.

There was some acknowledgement of inventory in PC space but companies across the board allayed inventory fears and suggested that a) inventory situation is normal and b) situation this time is different from 2Q04 when lot of inventory was built in anticipation of a very strong 2H04. This year is about rational growth.

Motorola and Qualcomm gave pretty bullish presentations on the handset market and said that they had not seen any inventory build. Motorola expects to continue to gain market share in the next few quarters all the way till end of 2007 driven by RAZR, SLVR, Q and SCPL (to be launched in 2007).

Most US EMS are seeing strong top line growth with margin expansion and stretching of lead times. In contrast Venture is struggling to grow top line although margins are expanding which we think will become incrementally more difficult to expand.

HDD unit growth is expected to be strong in 2H06 driven by consumer applications. Seagate will terminate Maxtor’s 3.5” platform by end 2006 and transition customers to Seagate platform.

We are Overweight on Jurong Tech, Magnecomp, GES and STATSChipPAC is on the long side of our AP Tech trading Portfolio.

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