Dynapack International Technology Corp (順達), which makes lithium battery packs used in notebook computers and backup battery units (BBU) for servers powered by Nvidia Corp chips, yesterday cut its revenue forecast to an annual decline of up to 20 percent, attributable to adverse impact from strong appreciation of the New Taiwan dollar and price competition.
Three months ago, the company estimated revenue this year would slide about 10 percent from NT$13.91 billion (US$472.2 million) last year, due to an intensifying pricing war for the lithium battery packs used in notebook computers.
Recent appreciation of the NT dollar against the US dollar added to the already weak information-technology (IT) sector revenue and ate into the gross margin of those products, company president Chang Chung-hsing (張崇興) told investors.
Photo: Annabelle Chih, Bloomberg
Considering the foreign exchange fluctuations, Dynapack now expects revenue to shrink at a deeper rate of between 15 and 20 percent annually, Chang said.
However, non-IT sector revenue, mostly from BBUs, would continue to grow, Chang added.
The company stuck to its original estimate of 100 percent annual growth to reach NT$1.5 billion this year, as it seeks to supply its BBU to new customers and for new artificial intelligence server racks, Chang said.
“We are optimistic about the BBU business,” Chang said.
“The adoption of BBU by data center operations is gaining traction amid concern of data loss,” he said.
BBUs are integrated with server racks, providing rapid failover protection and becoming essential for uninterrupted operations for data centers.
Overall, non-IT business is expected to make up about 30 to 40 percent of the company’s total revenue this year, while IT business would account for 60 to 70 percent, Chang said.
Dynapack also said that it is expanding BBU capacity in Taiwan and Thailand.
With rising revenue contribution from BBUs, Dynapack expects gross margin in the second half to bounce back to more than the 15 percent registered in the first quarter this year, surpassing the first half, as BBUs deliver much higher margins than the corporate average.
Gross margin improved to 14.36 percent from 11.6 percent, thanks to favorable product products and a bigger revenue share of non-IT products, the company said.
Net profit plunged 53 percent year-on-year to NT$757 million during the first two quarters of this year, compared with NT$1.56 billion in the same period last year, it said.
The year-on-year reduction was due to lack of a significant asset disposal gains in the first half of last year, company spokesperson Lin Yu-Huei (林郁蕙) told investors.
Earnings per share (EPS) dipped to NT$4.96 from NT$10.31.
Despite lower EPS in the first two quarters, Lin assured investors that the company aims to pay more than NT$10 in its cash dividend next year, as asset disposal gains would be included in the payment.
Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process. Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover. The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements. Local media reports
AI BOOST: Although Taiwan’s reliance on Chinese rare earth elements is limited, it could face indirect impacts from supply issues and price volatility, an economist said DBS Bank Ltd (星展銀行) has sharply raised its forecast for Taiwan’s economic growth this year to 5.6 percent, citing stronger-than-expected exports and investment linked to artificial intelligence (AI), as it said that the current momentum could peak soon. The acceleration of the global AI race has fueled a surge in Taiwan’s AI-related capital spending and exports of information and communications technology (ICT) products, which have been key drivers of growth this year. “We have revised our GDP forecast for Taiwan upward to 5.6 percent from 4 percent, an upgrade that mainly reflects stronger-than-expected AI-related exports and investment in the third
TECHNOLOGICAL RIVALRY: The artificial intelligence chip competition among multiple players would likely intensify over the next two years, a Quanta official said Quanta Computer Inc (廣達), which makes servers and laptops on a contract basis, yesterday said its shipments of artificial intelligence (AI) servers powered by Nvidia Corp’s GB300 chips have increased steadily since last month, should surpass those of the GB200 models this quarter. The production of GB300 servers has gone much more smoothly than that of the GB200, with shipments projected to increase sharply next month, Quanta executive vice president Mike Yang (楊麒令) said on the sidelines of a technology forum in Taipei. While orders for GB200 servers gradually decrease, the production transition between the two server models has been
ASE Technology Holding Co (日月光投控), the world’s largest integrated circuit (IC) packaging and testing supplier, yesterday announced a strategic collaboration with Analog Devices Inc (ADI), coupled with the signing of a binding memorandum of understanding. Under the agreement, ASE intends to purchase 100 percent shares of Analog Devices Sdn Bhd and acquire its manufacturing facility in Penang, Malaysia, a press release showed. The ADI Penang facility is located in the prime industrial hub of Bayan Lepas, with an area of over 680,000 square feet, it said. In addition, the two sides intend to enter into a long-term supply agreement for ASE to
RSS