Passive components manufacturer Yageo Corp (國巨) has raised prices for its capacitor products four times this year amid a supply crunch in the market, a move that is expected to drive its revenue and earnings growth further up after a stellar third quarter.
The company on Wednesday last week announced that it is to raise prices for some capacitors by 20 percent to 30 percent beginning next month in the wake of a persistent shortage of multilayer ceramic capacitors (MLCC), which are used in communications devices and industrial products, such as mobile phones, handset chargers and power supply units.
The latest hike comes after Yageo in September decided to increase prices by 15 percent to 30 percent on certain MLCC products, after having already raised prices by 8 percent to 10 percent in April and by 15 percent to 30 percent in June.
This time, Yageo also told downstream clients that delivery times might be extended from one to three months to a maximum of six months, indicating that the market remains tight amid a disciplined capacity expansion by major players.
Yageo is the largest provider of passive components in Taiwan. MLCCs accounted for 50 percent of its revenue last quarter and chip resistors made up 44 percent.
The company competes with Walsin Technology Corp (華新科) and Chilisin Electronics Corp (奇力新) in Taiwan, as well as Rohm Co Ltd and Murata Manufacturing Co Ltd in Japan and Samsung Electro-Mechanics Co Ltd in South Korea.
Capacitors are used in various sectors, are mostly used in communication products, computers, home audio and video devices, as well as in automotive electronics and industrial power supply units.
Among capacitors, MLCCs are expected to see the fastest growth, as demand for high-end MLCCs rises amid specification upgrades for compact electronic devices, said the Industrial Economics and Knowledge Center (IEK, 產業經濟與趨勢研究中心), which forecast that, from last year to 2021, MLCC applications are likely to see the strongest annual growth — 28 percent — in automotive electronics, followed 22 percent in communications and 18 percent in the industrial power supply market.
With a wider range of applications for MLCCs, Yageo reported a record NT$8.37 billion revenue, 30.3 percent gross margin and NT$1.77 billion net income, or earnings per share of NT$5.07 in the July-to-September period.
Benefiting from the latest price hikes, the company is expected to continue delivering strong results this quarter, Taishin Securities Investment Advisory Co (台新投顧) said in a note on Friday, predicting that fourth-quarter sales would reach NT$8.41 billion at a higher gross margin of 32.6 percent and an earnings per share of NT$5.72.
In the first three quarters of the year, Yageo posted cumulative revenue of NT$22.61 billion, up 7.5 percent year-on-year, with a 27.8 percent gross margin and a net income of NT$3.64 billion, or an earnings per share of NT$8.07.
Capital Securities Co (群益證券) said in a note on Thursday that the MLCC shortage is expected to persist into the second quarter next year and to catalyze the overall performance of related vendors for another year.
“Yageo and Walsin are expected to continue expanding their capacities and developing products with high capacitance or products for niche applications. As both companies are expected to enjoy business opportunities related to booming markets, such as smartphone, automotive and industrial, we continue to see an upside in the future,” Capital said.
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