Market Overview

These Analysts Spoke With Chinese Handset Suppliers...And Found 3 Things

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In a new report, analysts at Brean Capital provide an update on the Chinese PC and handset supply chain. Analysts' latest conversations with suppliers have them convinced that upcoming numbers in the space could be a mixed bag.

Supplier Conversation Takeaways

Analysts list three major takeaways from recent discussions with suppliers:

1. Demand in China following the Chinese New Year (CNY) has been "lackluster at best."

2. The strong dollar is negatively impacting Chinese manufacturers' foreign demand.

3. Apple Inc. (NASDAQ: AAPL) demand for Q1 was likely stronger than expected.

How Bad Is The Weakness?

While analysts concede that there has been demand weakness in recent months, they are not yet convinced of the severity of the weakness or how long it will last. Analysts see weakness in the mobile channel as particularly troubling.

Related Link: Why Is The EU Investigating Apple, Pandora?

While the strong dollar hasn't impacted Chinese manufacturers' business within China, Chinese demand from other emerging markets has been hurt by dollar strength. Analysts see emerging market demand weakness carrying over into Q2 and feel that Chinese manufacturers will likely dial-back inventory levels in anticipation.

Analysts note that Apple alone should boost RF TAM demand in 2015, although they are uncertain exactly how large the demand will be. In addition, analysts predict an increase in geographic coverage and corresponding device capabilities coming in China.

Analysts specifically mention China Mobile Ltd (NYSE: CHL)'s FDD application.

Stock Picks

Despite the recent weakness, analysts remain positive on several names in the space.

Brean has Buy ratings on Avago Technologies Ltd (NASDAQ: AVGO), QUALCOMM Inc (NASDAQ: QCOM), Qorvo Inc (NASDAQ: QRVO) and Skyworks Solutions Inc (NASDAQ: SWKS).

Latest Ratings for AAPL

DateFirmActionFromTo
Oct 2020Raymond JamesMaintainsOutperform
Oct 2020Piper SandlerMaintainsOverweight
Oct 2020Credit SuisseMaintainsNeutral

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Posted-In: Brean analysts Brean Capital Chinese Handset Suppliers Chinese New YearAnalyst Color Analyst Ratings Tech

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