Maybe.
SMTC does not provide capacitors, LCD's, flash memory, or other products mentioned in the article, so rising prices for these components might not affect margins signifigantly.
The situation could also have the reverse effect. For example, if INTC requires an LDO from SMTC as part of building a motherboard, they might delay delivery if a shortage of another component prevents completion. Specific contractual agreements between SMTC and their customers would determine the extent to which this occurs.
Whether or not a customer is a turns customers would likely affect their opportunity to exercise this strategy. A company that drops too many of theze shots on SMTC would likely be frowned upon, possibly subject to additional requirement or higher prices in the future.
Also, there is approximately a 13-week lead time on the manufacture of SMTC components. I don't think the process has much flexibility in terms of compressing the time table, so SMTC would also have to ramp up if they wish to increase production.
It also would depend on how much capacity SMTC has available in their plants, as well as their contracts to outsource manufacture of some components. If they have to request additional capacity from an outsourcer, they might have to pay the price to guarantee delivery, effectively making the effect an overall wash. Worse yet, if they have only a certain guaranteed capacity level from an outsourcer, there is always the small chance SMTC might also be affected by a sustained shortage.
I'm confident SMTC management has addressed this condition as best as possible, most likely having anticipated the situation well before it became public. "Platinum management" is how I refer to them, and forecasting future issues seems to always have been one of their strong points.
In the end, SMTC will make the best of what is available at the time. In comparison to competitors, they will fare better because they are smarter, and very well managed. Given extreme conditions that remain a problem for an extended period of time, they ALL suffer.
We'll see ...
Watch inventory levels, percentage of business which is turns based, and net margins. These are the measure which might provide insight as to how it affects SMTC long-term.
Best to SMTC longs :o)
Regards, JB |
