6/13/00 KEM CEO David McGuire notes
- joined KEM 1958 when they made first capacitor there
- seen nine economic cycle, last one was worst, this will be the best and longest duration
- 13% growth over 13 years?
- 14,000 employees
- $1.3B in shipments per year.
- Tantalum capacitor - the faster the IC circuit, the more capacitors needed. Seen 3 capacititors per IC in 1992 - to 6/IC today
- Japan does not import things electronic
- MOT, NOK, ERICY, DELL, CQP, top auto companies are customers and many contractors like Jabil and Solectron
- top line growth is 20%
- Sales are telecommunicationis 30%, Computers is 30%, Automotive 10%, 30% is distribution to rest of thousanda of customers
- Industry is cyclical. Make tantalum and ceramic capacitor. Unit growth 20%/yr. 85% capacity in industry. Sector does not run 100% capacity like semiconductors.
- KEM made 35,000 different type of capacitors last year.
- Electronic heated up in 1994 due to PC demand. After 2 1/2 years, the industry slowed. Went through sharp shipment correction.
- Last cycle triggered by Asian flu - killed off demand for consumer electronics. Freed up world capacity for capacitors since ASIA not buying. Price erosion for 2 years and reduced margins and stopped all capacity expansion, first time happened in years.
- Beginning in Dec98, consumer electronic in Japan started picking up, Last year PC picked up, broadband picked up this year. We find industry capacity below industry consumption trend. We will add 45% in unit capacity this year. Sector has to make up for 2 1/2 years of industry consumption. Believe demand will be strong for another year at least.
- All of our capacitors is on allocation. None available at all if not a regular customer. Sold out capacity for a year.
- Margins will rise through 2001.
- High growth is focused on tantalum and ceramic vs. alumin capacitor.
- Stragety is being preferred supplier since came out in 1987 from Union Carbide. Not many left in industry.
- AVX, VSH is prime competitor, Japan competitors deal in Japan so not ours. Only a few of us left in the western world.
- Broadband opens up electronics for everyone. We provide more value at less cost every year to all consumers.
- Institutional holders swing about quite a bit.
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radiowallstreet.com
No one wonder the equipment manufacturers are having shortages of components. Three companies (Princes) in the Western sector controlling supply and their own margin.
Have to like the CEO. Has been through it all.
Jack |
