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.
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.
SMART MANUFACTURING: The company aims to have its production close to the market end, but attracting investment is still a challenge, the firm’s president said Delta Electronics Inc (台達電) yesterday said its long-term global production plan would stay unchanged amid geopolitical and tariff policy uncertainties, citing its diversified global deployment. With operations in Taiwan, Thailand, China, India, Europe and the US, Delta follows a “produce at the market end” strategy and bases its production on customer demand, with major site plans unchanged, Delta president Simon Chang (張訓海) said on the sidelines of a company event yesterday. Thailand would remain Delta’s second headquarters, as stated in its first-quarter earnings conference, with its plant there adopting a full smart manufacturing system, Chang said. Thailand is the firm’s second-largest overseas
‘REMARKABLE SHOWING’: The economy likely grew 5 percent in the first half of the year, although it would likely taper off significantly, TIER economist Gordon Sun said The Taiwan Institute of Economic Research (TIER) yesterday raised Taiwan’s GDP growth forecast for this year to 3.02 percent, citing robust export-driven expansion in the first half that is likely to give way to a notable slowdown later in the year as the front-loading of global shipments fades. The revised projection marks an upward adjustment of 0.11 percentage points from April’s estimate, driven by a surge in exports and corporate inventory buildup ahead of possible US tariff hikes, TIER economist Gordon Sun (孫明德) told a news conference in Taipei. Taiwan’s economy likely grew more than 5 percent in the first six months
SUPPLY RESILIENCE: The extra expense would be worth it, as the US firm is diversifying chip sourcing to avert disruptions similar to the one during the pandemic, the CEO said Advanced Micro Devices Inc (AMD) chief executive officer Lisa Su (蘇姿丰) on Wednesday said that the chips her company gets from supplier Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) would cost more when they are produced in TSMC’s Arizona facilities. Compared with similar parts from factories in Taiwan, the US chips would be “more than 5 percent, but less than 20 percent” in terms of higher costs, she said at an artificial intelligence (AI) event in Washington. AMD expects its first chips from TSMC’s Arizona facilities by the end of the year, Su said. The extra expense is worth it, because the company is
The seizure of one of the largest known mercury shipments in history, moving from mines in Mexico to illegal Amazon gold mining zones, exposes the wide use of the toxic metal in the rainforest, according to authorities. Peru’s customs agency, SUNAT, found 4 tonnes of illegal mercury in Lima’s port district of Callao, according to a report by the non-profit Environmental Investigations Agency (EIA). “This SUNAT intervention has prevented this chemical from having a serious impact on people’s health and the environment, as can be seen in several areas of the country devastated by the illegal use of mercury and illicit activities,”
RSS