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Home work triggers demand jump for chips, laptops, network goods


WITH more employees working from home to help slow the spread of the coronavirus, demand is surging for laptops and network peripherals as well as components along the supply chain such as chips, as companies rush to build virtual offices.

Many firms have withdrawn earnings forecasts, anticipating a drop in consumer demand and economic slump, but performance at electronics retailers and chipmakers is hinting at benefits from the shift in work culture.

Over the past month, governments and companies globally have been advising people to stay safe indoors. Over roughly the same period, South Korea - home of the world's biggest memory chip maker, Samsung Electronics Co Ltd - on Monday reported a 20 per cent jump in semiconductor exports.

Pointing to further demand, nearly one in three Americans have been ordered to stay home, while Italy has banned internal travel.

"With more people working and learning from home during the outbreak, there has been rising demand for Internet services ... meaning data centres need bigger pipes to carry the traffic," said analyst Park Sung-soon at Cape Investment & Securities.

A South Korean trade ministry official told Reuters that cloud computing has boosted sales of server chips, "while an increase in telecommuting in the United States and China has also been a main driver of huge server demand."

In Japan, laptop maker Dynabook reported brisk demand which it partly attributed to companies encouraging teleworking.

Rival NEC Corp said it has responded to demand with telework-friendly features.

Australian electronics retailer JB Hifi Ltd also said it saw demand "acceleration" in recent weeks from both commercial and retail customers for "essential products they need to respond to and prepare" for the virus, such as devices that support remote working as well as home appliances.

China is leading chip demand, analysts said, as cloud service providers such as Alibaba Group Holding Ltd, Tencent Holdings Ltd and Baidu Inc quickly responded to the government's effort to contain the virus.

"Cloud companies opened their platforms, allowing new and existing customers to use more resources for free to help maintain operations," said analyst Yih Khai Wong at Canalys. "This set the precedent for technology companies around the world that offer cloud-based services in their response to helping organisations affected by coronavirus."

China's cloud infrastructure build-up has helped push up chip prices, with spot prices of DRAM chips rising more than 6 per cent since Feb 20, showed data from price tracker DRAMeXchange.

UBS last week forecast average contract prices of DRAM chips to rise as much as 10 per cent in the second quarter from the first, led by a more than 20 per cent jump in server chips. It said it expects DRAM chips to be modestly under supplied until the third quarter of 2021, with demand from server customers rising 31 per cent both in 2020 and 2021. REUTERS