Universal Scientific Industrial (Shanghai) Co (USI, 環旭電子), which makes Wi-Fi modules for products such as Apple Inc’s iPhone, expects earnings to improve next year as the squeeze from surging component costs and lackluster shipments eases.
Sales have started to improve ahead of the anticipated introduction of new products by clients, USI president C.Y. Wei (魏鎮炎) said in an interview in his Taipei office on Monday, without giving detailed forecasts.
USI, a unit of ASE Group (日月光集團), saw its first-half net income fall 30 percent to 392 million yuan (US$57.3 million) from 556 million yuan a year earlier, the company’s Web site showed.
Apple is expected to unveil three new models of the iPhone family next week.
USI, which also counts Lenovo Group Ltd (聯想) and Intel Corp among its customers, makes parts including Wi-Fi modules and motherboards that go into a variety of consumer and industrial products, including smartphones, laptops and automobiles.
The soaring costs of capacitors and resistors, which have hurt the company’s earnings, would probably slow as suppliers increase production, Wei said.
That should help earnings rebound as demand for clients’ products shows signs of improving, he said.
“We expect our profitability to recover in the third and fourth quarters, and to return to our normal level in 2019,” Wei said.
USI’s net income is set to rise 30 percent to 1.74 billion yuan next year from 1.34 billion yuan this year, an average of seven analyst estimates tracked by Bloomberg said.
Diversification in products -— and the locations they are made in — is helping the company achieve “healthy growth,” Wei said.
USI now has manufacturing sites in Taiwan, China and Mexico, and is expanding to Poland via an acquisition and to South America through a joint venture with Qualcomm Inc, he said.
The investment in Chung Hong Electronics Poland SP ZOO would give USI a foothold in Europe and the planned venture with Qualcomm, which is slated to start building its plant in 2020, would serve the Brazilian market, Wei said.
The company is also looking for investment opportunities in Southeast Asia, he said, without giving details.
USI shares have fallen 44.69 percent so far this year.
The stock closed at 8.79 yuan in Shanghai trading yesterday, up 1.03 percent.
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