Shares of Gold Circuit Electronics Ltd (金像電子), one of the nation’s leading manufacturers of printed circuit boards (PCBs) for notebook computers, took a beating on the Taiwan Stock Exchange yesterday after a fire broke out at its plant in Changshu, China, on Thursday.
Investors rushed to dump their Gold Circuit shares amid fears that the disruption of production at the Changshu plant resulting from fire damage would affect the company’s profitability, dealers said.
Gold Circuit shares closed 7 percent down at NT$6.53 yesterday, compared with a decline of 1.52 percent on the TAIEX.
According to Gold Circuit, production at the plant is likely to be suspended for several months and it was not clear when operations would resume.
The company said its production lines in Jhongli (中壢) and in Suzhou, China, would make up the shortage resulting from the disruption. However, the accident may result in a sales drop of about 15 percent, it added.
“The production suspension has created uncertainty over the company’s operations,” Horizon Securities (宏遠證券) analyst Benson Huang (黃重善) said. “That’s why the stock encountered a sell-off right after the market opened.”
Huang said Gold Circuit’s PCBs for notebook computers have an estimated gross margin of just 5 to 6 percent due to weakening global demand for notebooks.
“Such a gross margin is not at all impressive,” Huang said. “The production suspension is likely to make the situation even worse.”
Gold Circuit ranks as the world’s second-largest notebook computer PCB maker, with a 20 percent market share, after Hannstar Board Corp (瀚宇博德), which has a 43.5 percent share.
“To my knowledge, many buyers have shifted their orders from Gold Circuit to HannStar and other PCB makers, like Tripod Technology Corp (健鼎科技), since the fire,” Huang said. “I do not expect any significant impact on the global notebook computer supply chain.”
“Gold Circuit’s competitors have become the biggest beneficiaries of the fire,” he said.
HannStar Board shares climbed 3.10 percent to NT$16.65 and Tripod Technology shares rose 0.74 percent to NT$95.10 yesterday.