Wednesday, 19 August 2020 11:19

Top 20 Asia-Pac tech firms may see revenue drop this year: GlobalData

Top 20 Asia-Pac tech firms may see revenue drop this year: GlobalData Image by skeeze from Pixabay

The top 20 Asia-Pacific technology companies may face a rough time this year due to the volatile global situation and the the ongoing coronavirus pandemic, the data and analytics firm GlobalData says.

In a statement, the company pointed out that software sales and advertising revenue were largely responsible for the top 20 APAC tech companies reporting average revenue of more than US$40 billion (A$55.1 billion) and average revenue growth of 4% in 2019.

GlobalData said 80% of these companies had reported year-on-year growth in 2019, with eight reporting double-digit growth. Nintendo was the company with the highest revenue growth.

Keshav Kumar Jha, business fundamentals analyst at GlobalData, said: "Higher software sales for Nintendo Switch platform contributed to the increase in its hardware sales. The Nintendo Switch platform reported 36.4% year-on-year growth as the company launched special hardware edition, online payment service and several new titles of compatible software related to this platform.

"Meanwhile, 19% increase in the game and network services, mainly driven by higher game software sales, not only helped Sony to register year-on-year revenue growth, but also offset revenue loss due to the substantial decrease in smartphone and television unit sales."

The company said Tencent had reported year-on-year revenue growth of more than 15% in 2019, thanks to an increase in online games and online advertisement revenue, which grew by 10% and 18%, respectively. Growing demand for smartphone games in China, including Honour of Kings and Peacekeeper Elite, and overseas titles such as PUBG Mobile and Supercell helped improve its online games sales.

"Increase in advertising revenues from Weixin (the Chinese version of WeChat) led to a rise in the company's online advertising revenue. Tencent's VAS business, and FinTech and cloud services also contributed significantly to its revenue growth," said Jha.

Baidu reported a loss of 4.7% from its online marketing, but a gain of 32.8% by its online entertainment service business iQIYI enabled it to register a marginal revenue growth in 2019.

India-based IT services providers Tata Consultancy Services, Infosys, HCL Technologies, Wipro and Tech Mahindra reported 5% to 15% year-on-year revenue growth, mainly attributable to broad-based revenue growth experienced across verticals and geographies.

Samsung and SK Hynix reported a 10% or higher decline in revenue. Samsung's semiconductor sales fell 25% on a year-on-year basis, whereas a fall of more than 30% in DRAM and NAND flash products in overseas markets resulted in a net sales decline for SK Hynix.

"Improved top-line performance highlights the robust business model of major tech companies in the APAC region, which not only helped them mitigate the risk posed by COVID-19 but also win over investors' confidence," said Jha.

"However, with a majority of the governments implementing lockdown restrictions and closing borders in an attempt to contain the pandemic, there are supply chain disruptions and muted market demand.

"Against this backdrop, most of the companies are cutting down on their technology spending. In addition, the prevailing US-China geo-political tensions may also affect the operations of APAC-based technologies companies in 2020."

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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