Fri, May 02, 2025 page9

• Advantech delays price hikes amid tariff uncertainty

  • By Meryl Kao / Staff reporter
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  Embedded computer module and industrial motherboard maker Advantech Co (研華) on Wednesday said it would postpone plans to raise product prices for shipments to the US to help customers cope with the uncertainty surrounding US tariff policies.

  Advantech had planned to hike prices on US-bound products after US President Donald Trump proposed a 32 percent “reciprocal” tariff on Taiwanese goods, but the plan has been postponed following a 90-day tariff pause, Advantech chief financial officer Eric Chen (陳清熙) told an earnings conference in Taipei.

  About 93 percent of the company’s shipments to the US come from Taiwan, 6 percent from China and 1 percent from Europe, and the company is discussing with major customers ways to ease the tariff impact, including shipping products directly to them without going through US customs, Chen said.

  

  An Advantech signage is pictured in New Taipei City’s Linkou District in an undated photograph.

  Photo: Fang Wei-chieh, Taipei Times

  Advantech operates assembly plants in the US, focusing on high-value peripherals, such as central processing units (CPUs), hard drives and memory products, which are assembled locally and shipped directly to customers to mitigate the impact from tariffs, Chen said.

  About 40 percent of Advantech’s US customers bear the tariffs themselves, while the company initially covers the remaining 60 percent and passes the costs on to customers later, depending on the terms of the transaction, he said.

  So far, none of the company’s North American customers has asked it to shoulder the tariff costs, as the levies are imposed by the US government, Chen said.

  However, the company would absorb part of the costs, while customers would bear the majority, he added.

  The company remains positive about its revenue outlook for the second quarter, with no significant cases of customers front-loading or shifting orders so far, Chen said.

  However, if the US still imposes high tariffs on Taiwan after the 90-day pause, the company fears customers might postpone their shipments in the second half of this year, he said.

  Regarding the company’s production bases worldwide, Taiwan and China each accounted for 45 percent of its total capacity, followed by Japan at 8 percent and Malaysia at 2 percent.

  The company might consider building a new production base, possibly in Southeast Asia or the US, as it expects revenue to rise from 2028 to 2032 and existing capacity might fall short, Chen said.

  Last year, Advantech’s board approved the establishment of a second system assembly plant in northern California, which is scheduled to be completed by the end of this year and begin operations next year, doubling the company’s assembly and testing capacity in the US, Advantech president of the intelligent systems sector Linda Tsai (蔡淑妍) said.

  About 70 percent of Advantech’s US sales come from system products, and if customers require local production, the company could shift part of its assembly to the US, she said.

  Advantech is also evaluating whether to set up a surface-mount technology line, possibly in cooperation with local US firms initially, Tsai said.

  In the first quarter, the company’s revenue rose 25 percent year-on-year to NT$17.35 billion (US$541.9 million), net profit grew 37 percent to NT$2.73 billion and earnings per share increased to NT$3.17 from NT$2.32, driven by rising demand for embedded computer products and intelligent systems.

  Gross margin rose 0.5 percentage points year-on-year to 40.5 percent, while operating margin improved to 16.9 percent from 13.8 percent, the company’s earnings report showed.

  The company expects this quarter’s revenue to total US$530 million to US$550 million — or NT$17.17 billion to NT$17.82 billion in New Taiwan dollar terms — and it forecasts gross margin to be within the range of 39 percent to 41 percent, while operating margin to be from 16 percent to 18 percent, Advantech said.
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