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Low-cost smartphones set to boost Taiwan’s industrial sector

mThe rising popularity of low-cost smartphones worldwide is expected to boost sales at local manufacturers in the global handheld device supply chain, market analysts said recently.

Attempts by Apple and other handset makers to win over emerging markets means good things for Taiwanese suppliers, many of whom are important parts of Apple’s supply chain, according to Chris Hung, a research manager with Taiwan-based Market Intelligence & Consulting Institute.

Hon Hai Precision Industry — which assembles iPhones and iPads for Apple, better known by its trading name Foxconn — and integrated circuit companies Advanced Semiconductor Engineering (ASE) and Siliconware Precision Industries could benefit with increased sales growing in the third quarter.

Hon Hai has secured all orders to assemble the flagship iPhone 5S and a portion of orders to assemble the relatively lower cost iPhone 5C, according to analysts.

They said the company, which also assembles low cost smartphones for other vendors, is expected to post higher consolidated sales in the third quarter before likely peaking in the fourth.

In the second quarter, Hon Hai’s revenue rose 10.7% from the first quarter to NT$895.6 billion (US$30.3 billion).

ASE, meanwhile, posted NT$18.8 billion (US$632 million) in consolidated sales for August, up 7.4% from a month earlier and the company’s highest one-month figure yet this year, while Siliconware’s consolidated sales rose 6.2% from a month earlier to a record high of NT$6.5 billion (US$219.6 million).

The two IC packaging and testing service providers, which are believed to be parts of Apple’s supply chain, could see their sales for the third quarter continue to grow on solid demand for entry-level smartphones, analysts said.

In the second-quarter, ASE’s consolidated sales stood at NT$50.8 billion (US$1.7 billion), up 5% from the previous quarter, while Siliconware’s hit NT$17.6 billion (US$594.6 million), up 27.4% quarter-on-quarter.

The two companies will also likely get a boost from other manufacturers’ push to ship low-cost smartphones to emerging markets, particularly China, analysts said.

Market Intelligence & Consulting Institute predicts that the production value of Taiwan’s IC packaging and testing services this year is expected to grow to NT$373.1 billion (US$12.6 billion), a 7.3% year-on-year growth.

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