Yageo to double its investment in Taiwan
Julian Ho, Taipei; Steve Shen, DIGITIMES Friday 10 April 2020
MLCC and chip resistor supplier Yageo has received a green light from Taiwan's government to nearly double the investment amount for a previously approved expansion project aiming at ramping up its production capacity in Taiwan.
The company will increase its equity investment to NT$31.2 billion (US$1.04 billion) from the NT$16.5 billion announced in late 2019, as it is gearing up output to satisfy increasing passive components demand for applications including servers, business notebooks, networking, industrial control and medical care devices, according to company sources.
The increased investment is also in line with the company's medium- to long-term strategies to develop related products for 5G-related and automotive electronics applications, the sources added.
Whiling ramping up output from its existing plants in Kaohsiung, southren Taiwan, the company has also started construction of a new plant at the Dafa Industrial Park, also in Kaohsiung, which would create about 1,900 jobs, said the sources.
The sources also noted that the company's plants in China have yet to resume normal production and most plants are currently operating at 50% of their capacities on average, compared to 30% at the peak of the coronavirus impacts, resulting in tight supplies for most passive components, noted the sources.
The supply constraints, particularly for chip resistors, are expected to continue through the second quarter, added the sources.
Bolstered by rush orders, the company has reported strong sales of NT$4.035 billion for March, representing an increase of 50.4% from the previous month and 14.8% from a year earlier.
Concerns about server component shortages emerge
With a number of Southeast Asian countries imposing various levels of coronavirus lockdowns, concerns have been rising about component shortages that may hit the server industry supply chain, according to industry sources.
Demand for servers from datacenter players has been picking up and may last into the second half of 2020. Although related component supply has remained stable at the moment, the situation may change with the virus fast spreading.
Countries in Southeast Asia are still working hard to fend off the pandemic. The government of the Philippines has recently extended the community quarantine in Luzon to April 30.
The Malaysia government has also begun locking down cities after witnessing rising coronavirus cases since late March. Some Taiwan-based supply chain makers have disclosed their operations there are partly restricted by the contingecy measures with production capacities being hindered.
Because of the concern about potential component shortages, China- and US-based datacenters have all been placing aggressively short lead-time orders hoping to minimize the impact, the sources said.
Inventec saw consolidated revenues increase 140.79% on month in March driven mainly by its strong notebook and server shipments. The ODM also expects its server shipments to enjoy a sequential growth in the second quarter.
Taiwan-based server maker Mitac reported consolidated revenues of NT$3.06 billion (US$100.89 million) for March, up 21.09% on month and 22.98% on year thanks to increased orders. Mitac had resumed around 90% of its capacity in China by the end of the month.
Despite the server business' strong shipment growth, Mitac's automotive and consumer product shipments both went down on month in March.
In response to the possible component shortages, Mitac has already been working keenly trying to secure its component supply, aiming to maintain a growth in the second quarter, the sources said.
At the moment, shortages are most likely to occur for passive components, cables/wires and connectors, the sources added.
In addition to component shortages, some server makers such as Wiwynn are now facing issues about delivering products to clients in the US due to disrupted logistics systems resulting from lockdowns in the country, the sources noted.
Wiwynn reported consolidated revenues of NT$10.87 billion for March, down 8.34% on month and 9.71% on year. So far, Wiwynn's clients have not cut any of their orders, while the company's capacity has also been fully restored, said the company.
The sources said the logistics systems in the US may recover later this month.
Server components may face shortages |
