Shortages of key components and raw materials remain Pegatron Corp’s (和碩) greatest challenges, but the situation is expected to ease in the second half of the year, the company said yesterday.
Speaking at the firm’s annual general meeting in Taipei’s Beitou District (北投), Pegatron chief executive officer Liao Syh-jang (廖賜政) said that production cannot keep up with orders.
“We’ve been working with customers and suppliers, even using capacity at our subsidiary to help out,” Liao said. “The shortage of components and raw materials is our greatest challenge, but our orders are very strong.”
The Apple Inc assembly partner is looking to improve the utilization rate at its factories to alleviate shortages and meet demand, Liao said.
“I believe the situation will improve in the second half of the year from the first half,” he said.
Effects of the COVID-19 pandemic have slowed production at Pegatron plants in Malaysia and Vietnam, although the facilities have been operating at least 60 percent of capacity, Liao said.
Pegatron would continue expanding its production capacity worldwide, Liao said.
“In addition to expanding our Taiwanese facilities, Pegatron is looking to increase production in Vietnam, India and North America to prepare for future demand,” he said.
Describing problems to keep up with orders as a “sweet burden,” Pegatron chairman Tung Tzu-hsien (童子賢) said that the company is cautiously considering investments, as it is trying to avoid making hasty decisions to expand amid the current red-hot market situation.
“Our investment decisions need to make sense in the long term. New facilities take 10 years to amortize costs,” Tung said. “We need to carefully evaluate how much of the demand is real, how much of it is transitory and how much of it is not real demand, but the result of panic buying.”
Tung described the electric vehicle (EV) market as “full of future promise.”
“We are still at the initial stage of EV development, but the next 10 years hold exciting developments,” he said. “Pegatron is looking to find reliable clients to approach the EV market together.”
Once Pegatron has established itself in the EV market, the firm’s gross profit should be better than in existing mature or highly competitive sectors, he said.
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