Bangkok--10 Aug--Moody's Asia Pacific
Moody's Investors Service has a negative rating outlook for the technology and semiconductor sectors in Asia Pacific (excluding Japan) over the next 12-18 months.
In a new report, Moody's says that demand remains fragile for discretionary consumer electronics products, including PC and memory related peripherals, despite their recovery from a cyclical bottom in 4Q08.
The report's author, Ken Chan, a Moody's vice president and senior analyst, says, "Memory prices, which is one of the leading indicators of the semiconductor and PC sector, have risen sharply in recent months, but a restarting of idled capacity in response could dampen the current rally." Chan also expressed concern over the sustainability of end-user demand.
Moody's currently has negative outlooks for most of the issuers in the sectors and has withdrawn several other ratings. Chan, however, sees a silver lining for those that remain: "The two-year slump and financial crisis that brought about the bankruptcies of a major German chipmaker and of two rated back-end manufactures in Asia Pacific (ex Japan) have forced other issuers to strengthen their financial profiles to cope."
Nevertheless, he adds a caveat, saying, "Retention of support from key shareholders remains a major factor in the ratings for several firms, such as Chartered Semiconductor, STATS ChipPAC and Hynix."
Chan notes that a liquidity squeeze led to two semiconductor companies defaulting in the region, but says, "Balance-sheet liquidity for the other issuers, apart from Hynix, is at least adequate, and Hynix has also recently taken measures to improve its liquidity through equity raising."
The report, entitled "Asia Pacific (ex Japan) Technology and Semiconductor Sectors: Negative outlook as demand still fragile", is available at www.moodys.com .
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Hong Kong
Ken Chan
Vice President - Senior Analyst
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077
Hong Kong
Gary Lau
Senior Vice President
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077