Printed circuit board supplier Mutual-Tek Industries Co Ltd (相互股份) is to end production in Taiwan, as the US-China trade dispute and Washington’s sanctions on Huawei Technologies Inc (華為) have significantly reduced its revenue, it said on Saturday.
The company, based in New Taipei City’s Sinjhuang District (新莊), said in a regulatory filing that it would move all production capacity to Changshu in China’s Jiangsu Province, with Taiwan serving as its operational headquarters.
The adjustment is expected to affect about 600 employees, it said.
“The sudden decrease in Huawei’s orders has significantly reduced the company’s capacity utilization and seriously affected the company’s operations,” Mutual-Tek said in the filing.
Huawei’s orders accounted for about 50 percent of Mutual-Tek’s consolidated revenue in the second quarter of last year and 40 percent in the second quarter of this year, the company said.
Module manufacturers since the end of last month have notified Mutual-Tek of suspensions in shipments, it added.
“After considering the production costs, transportation costs and geographical attributes of the end customers, the company has decided to consolidate its existing production lines and terminate production in Taiwan,” Mutual-Tek said.
Established in 1990, Mutual-Tek’s main products include module boards for handset camera lenses and rigid-flexible printed circuit boards, and its major customers include Hon Hai Precision Industry Co (鴻海精密), Primax Electronics Ltd (致伸科技), Sunny Optical Technology Group Co (舜宇光學), O-film Tech Co (歐菲光) and Q Technology (Group) Co (丘鈦科技).
The company last year had a production capacity of 557 million printed control boards and shipped 524.75 million units. In the first eight months of this year, the company’s production capacity was 371 million units and it shipped 231.42 million units.
Consolidated revenue fell 33.67 percent year-on-year to NT$1.98 billion (US$67.92 million) over the period, company data showed.
To cope with the proposed capacity adjustment, the company plans to prepare for an impairment loss of about NT$190.6 million against the equipment and assets of the operations in Taiwan in accordance with International Financial Reporting Standards, it said.
It plans to retain employees at the head office, transfer some to overseas factories or make other arrangements based on their career planning, the company said.
Severance charges are estimated to be about NT$110 million, it added.
Mutual-Tek would terminate a plan to invest NT$3.3 billion in building a new plant and a research and development center in New Taipei City’s Taishan District (泰山), which was approved by the Ministry of Economic Affairs as part of a government-subsidized investment program in November last year.
In a separate filing to the Taiwan Stock Exchange on Saturday, the company said that it would sell 14,029.5m2 of land in the Taishin Industrial Park (泰山工業區), which it acquired last year for NT$1.28 billion as part of its efforts to adjust production lines and revitalize company assets.
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