While there are still a lot of Q3 tech earnings reports left to be shared, what has been shared to date by companies such as Texas Instruments (TXN) , Taiwan Semiconductor (TSM) and Logitech (LOGI) suggests demand for many types of consumer tech hardware still looks pretty good as seasonally huge Q4 kicks off.
On Tuesday afternoon, TI reported that its Personal Electronics revenue -- it covers chip sales involving PCs, mobile devices and various other consumer electronics products -- rose more than 20% sequentially and about 15% annually.
In addition, when asked about the drivers of this growth, IR chief Dave Pahl suggested that -- unlike in Q2, when PCs and tablets were the main drivers -- TI's Personal Electronics strength is now pretty broad-based and also encompasses products such as TVs and smart speakers.
"[Our] best estimate or guesstimate of what's going on is that as people are spending more time at home, they're upgrading the things that they're using more, so that spend is broadening beyond just the PC," Pahl said. That's a take Logitech probably wouldn't disagree with.
The peripherals giant blew away its calendar Q3 estimates, with annual, constant-currency, revenue growth soaring to 73% from calendar Q2's 25%. The growth rates shown below for Logitech's PC webcam, videoconferencing hardware, gaming peripherals and tablet accessory businesses speak for themselves.
Logitech's September quarter (fiscal Q2) performance by business line. Source: Logitech.
In addition, smartphone demand seems to be rebounding well after taking a major nosedive in March and April. TSMC, which manufactures chips for Apple (AAPL) , Qualcomm (QCOM) , MediaTek and many other mobile chip developers, reported that its smartphone-related revenue rose 12% sequentially in Q3 and suggested that the business would continue doing well in Q4 in spite of the halting of shipments to Huawei's HiSilicon chip unit.
TSMC's report followed Q3 guidance hikes from several chip suppliers with healthy iPhone exposure, including NXP Semiconductors (NXPI) , STMicroelectronics (STM) and Qorvo (QRVO) . And TSMC's report was in turn followed by analyst reports pointing to strong iPhone 12 pre-orders.
Analyst Ming-Chi Kuo estimates that Apple saw 1.7 million to 2 million iPhone 12 pre-orders during the first 24 hours the phones were available -- well above the estimated 500,000 to 800,000 pre-orders seen for the iPhone 11 line a year ago, even though Apple for now is only taking orders for two of its four iPhone 12 models (the standard iPhone 12 and 12 Pro).
Kuo also estimates the two iPhone 12 models saw 7 million to 9 million pre-orders through the end of last weekend, which compares with 10 million to 12 million pre-orders for the entire iPhone 11 lineup a year earlier. He notes iPhone 12 Pro and Chinese pre-orders were particularly strong.
Last but not least, all signs still point to gaming hardware flying off of retail store and e-commerce warehouse shelves this holiday season. PlayStation 5 and Xbox Series X pre-orders have been selling out quickly after new stock becomes available, and Nvidia (NVDA) CEO Jensen Huang has forecast his company's new Ampere-architecture desktop GPUs will be supply-constrained through year's end.
None of this necessarily means that a company benefiting from these consumer spending trends is worth buying right now. Valuations look stretched for many (though not all) of the tech companies with strong exposure to them.
But all the same, what's been shared during the early stages of this earnings season about consumer tech hardware spending trends does bode well for the near-term, top-line performance of firms set to report over the next few weeks that also have strong exposure to the space -- even if a stimulus deal isn't reached this month.
