Taipei, Oct. 17 (CNA) Shares of Wistron Corp. soared Thursday morning as hopes were raised that the contract notebook maker has secured orders from Apple Inc. after the company announced a production expansion plan a day earlier, dealers said.
The buying reflected optimism that the business link with Apple will offset the impact from falling demand for notebooks and strengthen Wistron's bottom line, they said.
As of 11:33 a.m., shares of Wistron had added 3.61 percent to NT$27.30 (US$0.92), with 15.45 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.49 percent at 8,372.71 points.
"The plan unveiled by Wistron to expand production capacity at a plant in China renewed hopes that the company is prepared to handle orders from Apple," Hua Nan Securities analyst Kevin Su said.
In a statement, Wistron said it will spend about NT$2.86 billion in capital expenditure to expand production capacity at the China plant located in Kunshan, Jiangsu Province, to meet rising demand for communication devices such as smartphones and tablets.
Due to the announcement, the market speculated that Wistron will use the Kunshan production base to assemble high-end iPhones for Apple.
Wistron declined to comment on the speculation.
"As Wistron shares had been faced with downward pressure in recent sessions due to the weakness of the global personal computer market, the news about the production expansion prompted many bargain hunters to come back this morning," Su said.
After Wistron shares hit a recent high of NT$31.00 Sept. 10, institutional investors had pocketed their gains to push the stock down about 15 percent as of Wednesday, when foreign institutional investors served as net sellers of 978,525 Wistron shares.
"It is not wise for investors to chase the stock simply on the Apple order speculation, as the notebook business remains stagnant," Su said. "It is possible that Wistron shares will encounter another wave of profit-taking as the stock moves closer to NT$28.50."
According to Digitimes Research, worldwide notebook shipments for the fourth quarter are expected to fall 3.2 percent from the third quarter and could also drop 13.4 percent from a year earlier.
The research group said shipments from Taiwan for the fourth quarter are expected to fall 5.9 percent from a quarter earlier and to shed 18.2 percent from a year earlier.
"Although Wistron is gearing up to diversify its product portfolio in a bid to assuage the impact of a fall in PC demand, notebook production still weighs heavily in its sales," Su said.
"Even if Wistron has secured orders from Apple, the new business is unlikely to help the company turn itself around any time soon," Su said.
In the second quarter, contract notebook production accounted for 45 percent of Wistron's total sales, down from 52 percent in the first quarter, as the company devoted resources to smartphone and tablet manufacturing.
(By Han Ting-ting and Frances Huang)