Major contract electronics makers are planning to expand production capacity in Taiwan and overseas this year to meet rising demand from clients, with Pegatron Corp (和碩) planning to increase its capital expenditure by nearly 30 percent from last year.
The iPhone assembler has allocated US$500 million for capital expenditure this year, up 29.87 percent from last year’s US$385 million, Pegatron said at an earnings conference on March 10.
Market demand for products from Pegatron’s three main business segments — computing, consumer electronics and communication devices — would remain strong this year, Pegatron chief executive officer Liao Syh-jang (廖賜政) said.
Photo: Fang Wei-jie, Taipei Times
The company would mainly use the spending increase for automotive capacity expansion in North America and to add new assembly lines for other products, he said.
“We expect Pegatron to ramp up auto capacity at its China and Taiwan plants, and expand capacity in Vietnam, India and North America based on client needs,” Yuanta Securities Investment Consulting Co (元大投顧) said in a note on Tuesday.
“Pegatron has limited sales exposure to [the] automotive, metaverse and Internet of Things [sectors], and we expect these segments to see significantly stronger growth versus handset business,” Yuanta said.
Pegatron has three US automotive clients and is expected to continue receiving orders from other clients in the industry, Yuanta said, but added that related earnings contribution would take time to increase.
The company has also received orders for virtual reality devices from several US clients, but sales contribution from this segment is likely to grow notably only from next year, Yuanta added.
For the whole of last year, Pegatron’s revenue decreased 9.7 percent to NT$1.26 trillion (US$44.43 billion) from NT$1.4 trillion in 2020, while net profit increased 1.7 percent to NT$20.55 billion from NT$20.21 billion, company data showed.
Earnings per share were NT$7.71 last year, the data showed.
Wistron Corp (緯創) is also planning to raise its capital spending to NT$16 billion this year, from between NT$14.5 billion and NT$14.6 billion last year, as the company has a better growth outlook for this year given strong pull-in from a major US client for metaverse deployment.
The spending increase of about 10 percent would be used for capacity expansion in Taiwan and Mexico, as the company is positioned to shift its core business to focus on high-margin products, including servers, artificial intelligence applications and automotive displays, Wistron chairman Simon Lin (林憲銘) told investors on Wednesday last week.
The company’s revenue rose 2.02 percent year-on-year to NT$862.08 billion last year, while net profit rose 20.6 percent to NT$10.47 billion, with earnings per share of NT$3.76, company data showed.
Inventec Co (英業達) is also planning to increase its capital expenditure, to US$300 million this year, up nearly 33 percent from the previous year, as the company looks to further invest in capacity in Mexico to supply servers to US clients, it said in November last year.
The company is yet to update its capital expenditure plan for this year.
“Overall, we expect Inventec’s server business to see low double-digit percentage growth year-on-year in 2022,” Yuanta said.
The firm on Wednesday reported record revenue of NT$519.73 billion for last year, up 2 percent from 2020, while net profit declined 13.4 percent to NT$6.54 billion, with earnings per share of NT$1.82.
However, Quanta Computer Inc (廣達) and Compal Electronics Inc (仁寶) are planning to decrease their capital expenditure this year, to between NT$8 billion and NT$9 billion, and between NT$7 billion and NT$8 billion respectively, as they have completed large-scale capacity expansion in the past two years, the companies said separately.
Last year, Quanta’s revenue increased 3.5 percent annually to NT$1.13 billion, while net profit rose 32.9 percent to NT$33.65 billion, with earnings per share of NT$8.73, the highest in the company’s history.
Compal’s revenue increased 18 percent to NT$1.24 trillion, while net profit soared 35 percent to NT$12.63 billion, or earnings per share of NT$2.9, the highest in 11 years, company data showed.
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