Eclat Textile Co (儒鴻) has found new outsourcing factories and is expected to ramp up its own capacity by 15 percent next year to address a lack of capacity and labor in Vietnam this year, analysts said on Wednesday.
The garment and fabric supplier is likely to face a capacity shortfall of 1.8 million to 2.2 million pieces per month next year against rising orders from its major brand clients.
As a result, the company plans to raise its monthly garment output to more than 10 million pieces next year, from an estimated 8.5 million to 8.8 million pieces this year, said the analysts who attended the company’s earnings conference on Tuesday.
Eclat plans to lift its capacity utilization rate from 80 percent to 95 percent at factories in southern Vietnam, which should generate an additional 800,000 pieces per month, they said on Wednesday.
Eclat told analysts that it has secured outsourcing factories in southern Vietnam to add 24 production lines, which should boost monthly garment capacity by 400,000 to 450,000 pieces for this quarter and next quarter, while it is still searching for other outsourcing factories in northern Vietnam to add 10 to 20 new production lines per month, they said.
“The company has seen modest sales growth this year to date due to its lack of capacity and labor in Vietnam, but this is likely to be resolved in 2020,” Yuanta Securities Investment Consulting Co (元大投顧) analyst Peggy Shih (施姵帆) said.
Eclat’s cumulative revenue for the first 10 months of this year increased 1.35 percent from a year earlier to NT$23.03 billion (NT$754.1 million), the company said on Nov. 7.
Net income for the first three quarters was up 0.8 percent year-on-year to NT$3.16 billion, or earnings per share of NT$11.54, Eclat said in a financial statement issued on Monday last week.
The company’s sales and earnings for this quarter are expected to benefit from peak seasonality and stocking by a key retailer, SinoPac Securities Investment Service Corp (永豐投顧) said, without specifying the retailer.
Eclat is a leading integrated apparel manufacturer with operations in Taiwan, Vietnam and Cambodia. The company counts Nike Inc, Adidas AG, Under Armour Inc and Lululemon Athletica Inc among its major clients, and it would continue to benefit from clients’ supply chain consolidations, analysts said.
“The top five brand clients account for about 33-36 percent of Eclat’s total revenue and their contribution is expected to rise to 50 percent next year. There is no risk of disconnection in supply,” Jih Sun Securities Investment Consulting Co (日盛投顧) analyst Channie Wang (王章妮) said.
Eclat shares rose 3.06 percent last week to close at NT$404.5 on Friday in Taipei trading. They have gained 16.24 percent this year.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)