Now, irrespective of a macro recovery, we believe TVs and PCs will post weak growth, while smartphones and tablets post strong growth. With mobile devices—a consumer product—leading the growth of the tech industry, this is fueling the “consumerization” of mobile device parts. For DRAM, the focus is shifting from price competition to customer-based competition. As such, DRAM prices are unlikely to show the sharp volatility seen in the past.
Since mobile devices require less memory, we expect total memory demand to remain soft through 2013. However, memory supply-demand dynamics should improve thanks to slowing supply from production cutbacks and industry restructuring. Also, the LCD supply-demand situation is likely to improve on slowing supply, but the LCD industry is unlikely to recover in the long run.
Top picks: Samsung Electronics, Samsung Electro-Mechanics
With mobile devices taking the lead in the IT market, Korean tech firms have responded the best. Among them, we like the world's number-one smartphone maker, Samsung Electronics (SEC), and parts supplier to SEC, Samsung Electro-Mechanics (SEMCO). From 2013, the low-end to mid-range smartphone market is expected to swell, and SEC should benefit the most thanks to its diverse product line-up, economies of scale, and strengthened brand. Tablets are also emerging as a new growth driver for SEC, which is expected to strengthen synergies among divisions (handset, semicon, and display).
Eoin Treacy's view The mobile devices and tablets markets
represents a significant growth trajectory as media consumption habits evolve.
Just as many people no longer have a landline in their homes, preferring to
rely on their mobile phones, there is a distinct possibility that more people
will choose to rely more on tablets, phones and the cloud than desktops and
TVs for their media consumption.
Apple has been consolidating its earlier powerful advance since September and found support today above the November lows. A sustained move below $500 would be required to question current scope for some additional higher to lateral ranging. Over the medium-term, time is required in order to restore investor confidence.
Samsung Electronics found support in the region of the 200-day MA from July and continues to hold its progression of higher reaction lows. A sustained move below KRW1.3 million would be required to question medium-term scope for continued upside. Samsung Electro-Mechanics has rallied impressively from the October low to test the April highs and while somewhat overbought in the very short term, a clear downward dynamic would be required to check momentum beyond a brief pause.
At the other end of the scale, Hewlett Packard has fallen from a high over $55 to a November low of $11.35. At least some short covering is underway and a clear downward dynamic would be required to check current scope for some additional upside.