TAIPEI — Taiwanese integrated circuit designer ASMedia Technology Inc., a subsidiary of computer vendor Asustek Computer Inc., is forecast to benefit from broader adoption of the USB3.1 port and increasing chipset orders.
Sales and earnings of ASMedia, which designs data storage controller chips, are expected to increase, with compound annual growth rates of 68 percent and 94 percent, respectively, from 2014 to 2017, according to a U.S.-based brokerage.
The growth will be driven by rising adoption of USB3.1/Type-C connector standard and chipset orders from Advanced Micro Devices Inc. (AMD), ��with ASMedia leveraging its technology leadership, strong IP portfolios, solid customer relationships and competitive cost structure,�� the brokerage wrote in a June 25 note to clients.
The U.S.-based brokerage said it is the only broker to cover ASMedia and it gave an initial rating of ��buy�� on the stock, with a price target of NT$400 (US$12.92) �X nearly double ASMedia’s closing price of NT$217.5 on Friday.
Under Taiwanese regulations, the name of the brokerage cannot be reported because it offers specific forecasts that could influence the market.
The brokerage said it expects AMD to buy 6 million chipsets in 2016 and 12 million chipsets in 2017 from ASMedia after the companies announced an enhanced partnership in late 2014.
On the other hand, the adoption rate of USB3.1, which transmits data at 10 gigabits per second (Gbps) compared with UBS3.0’s 5Gbps, could rise to 3 percent in 2015 and 15 percent in 2016 from zero in 2014, thanks to specification upgrades among Intel Corp.’s Skylake chipset platform and motherboard brands like Asustek and Micro-Star International Co. (MSI), the brokerage said.
The brokerage forecast that ASMedia, as a leading USB3.1 IC supplier, will increase its USB3.1 solution sales by 302 percent year-on-year in 2016, accounting for 45 percent of its total sales compared with zero in 2014, along with a higher gross profit margin.
ASMedia, which listed on the Taiwan Stock Exchange in December 2012, reported consolidated revenue of NT$585.42 million in the first five months of 2015, a decline of 11 percent from the same period of last year.