Thu, Jan 10, 2019 - Page 12 News List

Yageo to compensate for revenue drop

SHORT-TERM CORRECTION:The company said that its Chinese customers had been conservative about their business outlook last month, due to the US-China trade spat

By Lisa Wang  /  Staff reporter

Multilayer ceramic capacitor (MLCC) supplier Yageo Corp (國巨) yesterday said it plans to trim its capacity expansion targets for this year after sagging demand drove last month’s revenue down to its weakest level in nine months.

Last month, revenue dropped 15.7 percent to NT$4.53 billion (US$147.07 million) from NT$5.38 billion in November last year, the lowest since March last year.

Yageo said it attributed sluggish demand for passive components used in most consumer electronics to a short-term correction.

Shipments to its customers in America and Europe fell during the holiday season, Yageo said in a company statement, adding that its Chinese customers remained conservative about their business outlook due to the US-China trade dispute.

In the quarter ending Dec. 31, revenue sank 47.06 percent to NT$16.23 billion from NT$30.66 billion a quarter earlier, while on an annual basis, revenue soared 68.2 percent, it said.

Since September, Yageo has been reducing its supply to distributors to help them alleviate inventory pressure, Yago said, adding that it would take one more quarter for its distributors to reduce their inventories to a normal level.

“There will not be strong sequential growth in the first quarter as the company has experienced in past years,” a company executive said in a telephone interview.

“The first quarter will be a flat period, compared with the fourth quarter [of last year],” they said.

To cope with short-term disparity in supply and demand, Yageo plans to push back its scheduled capacity expansion a bit to 55 billion units this year and 65 billion next year, the executive said.

Originally, Yageo planned to boost annual MLCC capacity to 60 billion units this year and 70 billion next year, from 50 billion last year.

“We still see growth for high-end and high-capacity MLCCs for vehicles and industrial devices in the long run,” the official said, adding that Yageo expects to see good demand for passive components used in 5G base stations this year.

Morgan Stanley last month said that sliding demand and excessive inventories would likely cause the average selling price of Yageo’s MLCCs to see a 15 percent quarterly decline this quarter, while prices should drop another 10 percent in next quarter.

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