Taiwanese multilayer ceramic capacitor (MLCC) manufacturers are recovering faster than anticipated, backed by the release of 5G-enabled smartphones in China and robust sales of Apple Inc’s iPhone 11 series, analysts said last week.
Along with Taiwanese firms, such as Yageo Corp (國巨) and Walsin Technology Corp (華新科技), global players like Murata Manufacturing Co Ltd in Japan and Samsung Electro-Mechanics Co Ltd in South Korea are also expected to benefit from a full-fledged industry recovery from the first half of next year, analysts said.
“The MLCC industry has been recovering rapidly as of late, helped by brisk sales of new iPhone models and rising 5G smartphone sales in China,” Seoul-based NH Investment & Securities Co analyst Kyuha Lee said in a note on Thursday. “We note that Taiwanese MLCC players, which are particularly sensitive to shifts in industry conditions due to their high supply portions, around 50 percent on average, to distributors, have confirmed that inventory levels are declining and lead times are expanding.”
“In terms of prices, Taiwanese MLCC manufacturers should see average selling price [ASP] declines of about 5 percent in Q4 of 2019 — an indication that future ASP declines should narrow,” Lee said.
The supply-demand conditions appear tight for 0201-size MLCC items used in smartphone products, with lead time extending to about three months, Yageo said recently.
The company estimated its inventory turnover would likely drop to below 60 days this quarter, compared with the 70 days it expected earlier.
“Considering that typical industry lead time is roughly four to six weeks, and that lead time in 2018, a period of tight supply, was three to six months, we view the currently expanded lead time as a sign of faster-than-expected MLCC business recovery,” Lee said.
Yageo on Friday reported consolidated revenue of NT$3.52 billion (US$115.4 million) for last month, up 9.2 percent from the previous month mainly on increased end-demand, the company said in a regulatory filing.
On an annual basis, revenue decreased by 34.5 percent.
In the first 11 months of this year, aggregate revenue was NT$38.03 billion, a decrease of 47.6 percent from the same period last year.
Looking ahead, Yageo said it is cautiously optimistic about its business performance and expects a continued decline in its inventory turnover days for finished goods due to recovering demand.
“However, due to the difficulty in recruiting enough workers at production facilities, the company could not raise its utilization rate to a large extent in the near term,” the company said, adding that the business environment remains challenging in light of US-China trade frictions.
Walsin also reported improved revenue for last month, up 7.43 percent from a month earlier to NT$2.26 billion, although the figure remained 43.95 percent less than a year earlier.
“With channel destocking coming to an end and unit prices stabilizing, customers in the distribution channel, cellphone manufacturers and consumer electronic segments are pulling in stock to get ready for the Lunar New Year holidays,” Walsin said in a statement on Friday.
From January to last month, aggregate revenue totaled NT$27.79 billion, down 39.95 percent from NT$44.79 billion in the same period last year, the company said.
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