Apple Inc’s major suppliers in Taiwan’s printed-circuit board (PCB) and IC substrate industry last month reported bigger-than-expected revenue declines, due to disappointing iPhone sales, the companies said in regulatory filings last week.
Compeq Manufacturing Co (華通), which produces multilayer and double-sided PCBs, saw its revenue fall 25.62 percent monthly and 29.7 percent annually to NT$4.01 billion (US$130.19 million), while its rival Unimicron Technology Corp (欣興) said that revenue fell 18.03 percent monthly and 6.61 percent annually to NT$5.82 billion.
Zhen Ding Technology Holding Ltd (臻鼎) saw its revenue fall 36.67 percent from the previous month and 41 percent annually to NT$9.44 billion, Flexium Interconnect Inc (台郡) reported that revenue declined 34.74 percent monthly and 44.66 percent annually to NT$1.97 billion, and Career Technology Co’s (嘉聯益) revenue fell 34.94 percent from the previous month and 2.85 percent from a year earlier to NT$1.21 billion.
Unitech Printed Circuit Board Corp (燿華) fared better with a monthly decline of 2.91 percent to NT$1.67 billion, but the figure was still 21.6 percent less than a year earlier.
Kinsus Interconnect Technology Corp (景碩) was the exception, reporting that its revenue grew 1.64 percent monthly and 18.18 percent annually to NT$2.05 billion.
The fourth quarter is traditionally a peak season for the industry, but Compeq and Flexium saw flattish growth in quarterly revenue from the previous quarter, while Unitech and Kinsus reported declining revenue.
Zhen Ding and Career posted double-digit percentage increases in quarterly revenue, although at a slower rate than their historical pattern, an analyst said.
“The sales momentum in the industry appeared relatively weak in the final quarter of last year compared with the past few years,” Jih Sun Securities Investment Consulting Co (日盛投顧) analyst Daniel Tsai (蔡志昇) said in a note on Friday.
Earlier this month, Apple cut its revenue guidance by about US$9 billion for this quarter, which translates into a decline in iPhone shipments of up to 10 million units.
Weak demand saw upstream Apple suppliers such as smartphone camera lens makers Largan Precision Co (大立光) and Genius Electronic Optical Co (玉晶光) — which usually ship their products three to four weeks ahead of PCB makers — report bigger-than-expected monthly sales declines for last month.
Tsai remained positive on the outlook of an IC substrate business based on ajinomoto build-up films amid a better pricing environment and resilient demand, with Unimicron his top pick, according to the note.
Taiwan Union Technology Corp (台燿), Elite Material Co (台光電) and Iteq Corp (聯茂) — companies that manufacture copper-clad laminates (CCLs) for PCBs — all reported negative sales growth for last month, due to weakness in datacenter demand, order cuts for base stations and pricing pressure in mid to low-end products, analysts said.
Prospects of the CCL sector are positive in the long term, driven by demand in 5G and automotive electronics, KGI Securities Investment Advisory Co (凱基投顧) analyst Jack Lin (林祐熙) said.
“We expect CCL makers’ aggressive expansion plans this year to inject new momentum for growth,” Lin said in a note.
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
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