Electronic components maker Lite-On Technology Corp (光寶科技) yesterday reported that first-quarter net profit rose 7.3 percent from a year earlier to NT$1.57 billion (US$52.42 million), despite the impact from the COVID-19 pandemic.
While revenue dropped 20.88 percent on an annual basis to NT$32.58 billion due mainly to a production halt in China, its gross margin climbed to a seven-year high of 14.5 percent, thanks to an improved product mix and operating efficiency, the company said.
“The gross margin would be 0.2 percentage points higher if we do not take into account losses incurred by subsidiary Silitech Technology Corp (閎暉),” Lite-On vice chairman and chief operating officer Warren Chen (陳廣中) told investors at an earnings conference in Taipei, adding that the company’s performance was affected by continuous losses from its solid-state drive (SSD) business.
Sale of the SSD unit to Japan’s Kioxia Holdings Corp was delayed by the pandemic, but the deal is expected to close by the end of this quarter, Chen said.
Giving a rosy outlook for business this quarter, Chen said the company is operating at full capacity across its plants in China to satisfy customers’ mass orders.
“Clients are pressing us everyday [because] the market is undersupplied, with sales channels empty,” Chen said.
The company forecast an 18 percent sequential increase in sales this quarter, given more working days than last quarter.
However, order visibility for the second half of the year remains low, as the pandemic continues to affect European and US markets.
“We will have to see how products perform this quarter at end markets,” Chen said.
Facing investors’ concerns over rising prices of passive components, Chen said Lite-On has found a local supplier offering more “reasonable” prices, adding that the company has enough inventory to see production through this quarter.
Lite-On is also aiming to increase its production outside China from 15 percent to more than 20 percent within the next two years.
The company has moved part of its production of motherboards and keyboards to a new manufacturing facility in Vietnam, which is expected to contribute less than 10 percent of total shipments this year, Chen said.
Lite-On last year relocated production of data center components and chargers to a plant in Kaohsiung amid the trade tensions between the US and China.
The company also has production sites in Thailand, Mexico and India.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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