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May 23, 2017

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HTC's overseas shipments forecast to grow 10% in Q2

TAIPEI--Taiwan-based smartphone vendor HTC Corp. (宏達電) is expected to report about a 10-percent sequential increase in shipments for the second quarter, largely on its efforts to unveil new models, according to a research report Thursday.

In the research note, KGI Investment Advisory said HTC's launch of its latest flagship model — the HTC One M8 — helped boost market demand and pushed up HTC's second quarter's shipments.

In addition, the mid-range HTC Desire 816 received a warm welcome in Taiwan, helping to lift the Taiwanese company's second quarter shipments, the advisory firm said.

KGI projected that HTC's second quarter shipments will range between 3.3 million and 3.8 million units, with the HTC One M8 accounting for 40-50 percent of the total.

On Tuesday, HTC reported a 4.6 percent monthly drop to NT$21.06 billion (US$702 million) in consolidated sales for May, well below the market estimate of NT$24 billion. In April, the sales figure was NT$22.08 billion.

Since the release of HTC's May sales data, investors have grown cautious about whether the company will be able to achieve its second quarter consolidated sales target of between NT$65 billion and NT$70 billion, after reporting NT$33.1 billion in the first quarter.

In its forecast for HTC's second quarter shipments, KGI also took into account the smartphone vendor's unexpected month-on-month decline in consolidated sales for May.

HTC is planning to launch a revised version of the HTC One M8 in June to cater to Chinese consumers, but it remains to be seen whether the new release will help sustain buying interest amid growing competition in the huge China market, the investment consulting firm said.

It said HTC will encounter escalating competition from Chinese vendors who are keen to sell lower cost models, and will also face challenges as a result of U.S.-based Apple Inc.'s expected launch of its next generation of iPhone later this year.

The stiff competition will lead to a fall in product prices in the smartphone business, which could erode HTC's gross margin, KGI said.

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