Merrill Lynch has further downgraded its performance expectations for the major Taiwanese notebook manufacturers, following indications that they are now anticipating a slowdown in demand for their portable products.

Bearish (http://www.theregister.co.uk/2004/07/13/chip_stocks_warning/) (at least as far as tech stocks go), ML has lowered its ratings for Quanta, Compal and Wistron, the world's three largest contract manufacturers of notebook PCs. Quanta and Compal stock now carry a 'sell' rating, down from 'neutral' and 'buy', respectively. Wistron has been downgraded from 'buy' to 'neutral', DigiTimes reports (http://www.digitimes.com/news/a20040817PR202.html).

Compal last week lowered (http://www.theregister.co.uk/2004/08/16/notebook_sales_h2/) its expectations of worldwide notebook shipments from 47m units to 43-44m. It said gross margins could fall to 5.9 per cent in Q3, down from a record-setting 6.4 per cent in Q2.

Quanta has reportedly trimmed its internal shipment target from 12m to 11m, an 8.3 per cent decline in demand.

ML expects notebook shipments to rise sequentially 10-15 per cent in Q4, so clearly the big dip in demand will come during Q3. Falling prices and rising inventories will keep manufacturers' gross margins down in Q4. ®

Related stories

Taiwan ODMs signal notebook sales slowdown (http://www.theregister.co.uk/2004/08/16/notebook_sales_h2/)
Wall Street bears take a swipe at chip stocks (http://www.theregister.co.uk/2004/07/13/chip_stocks_warning/)
Euro notebook sales slowdown signals end of boom (http://www.theregister.co.uk/2004/07/23/notebook_sales_slowdown/)
UK PC biz sees best growth for four years (http://www.theregister.co.uk/2004/08/04/uk_pc_market_q2/)
Consumers want widescreen notebooks - analyst (http://www.theregister.co.uk/2004/08/03/notebook_screen_preference/)
Intel to encourage channel to source notebooks direct (http://www.theregister.co.uk/2004/01/30/intel_to_encourage_channel/)
Dell drops out of China's low-end PC market (http://www.theregister.co.uk/2004/08/16/dell_china/)
Dell nabs HP notebook exec (http://www.theregister.co.uk/2004/08/11/dell_nabs_hp_exec/)