Tue, Apr 13, 2004 - Page 11 News List

Yageo production to rise with China investments

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Yageo Corp (國巨), Taiwan's biggest maker of resistors -- parts that control electricity in cellphones and PCs -- plans to invest US$50 million to boost production in China, its fastest-growing market.

The company will use the money to build a new plant and relocate production lines from Europe, President Remko Rosman said at a briefing in Suzhou city in eastern China.

The company is following customers such as Motorola Inc and Flextronics Inc that have shifted manufacture of mobile phones and notebook computers to China to take advantage of lower labor costs.

"The real advantage, apart from being near to our customers, is the lower labor cost in China," said Rosman.

Manufacturing costs are as much as 15 percent lower than in Taiwan and as much as 30 percent cheaper than Europe, he said.

Yageo forecasts China sales will rise to more than 35 percent of its total revenue in the second half, surpassing Taiwan sales, from 32 percent in the fourth quarter.

"[China] is the world's fastest-growing market with a 20 percent to 25 percent growth rate," said Alan Lee, general manager of the China unit.

"Main drivers for demand this year will be notebooks, motherboards and consumer electronics."

The company's multilayer ceramic capacitor, or MLCC, factory will have production capacity of 2 billion units per month by June, Rosman said. The company forecasts its share of the market for MLCCs will rise to 20 percent, from 15 percent next year. The plant will be the largest single MLCC factory with production capacity of 3 billion units a month.

Yageo plans to boost production of resistor chips to 14 billion units a month in June from 12 billion last month, raising its market share to 40 percent from 35 percent.

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