Yageo Corp (國巨) yesterday said that its revenue would drop by a low single-digit percentage this quarter from a historical high last quarter, as customers and distributors are holding back demand to concentrate on inventory digestion due to flagging smartphone and notebook computer demand.
The world’s biggest supplier of passive components expects to take three to six months to reduce its inventory of commoditized passive components to a normal level of 100 to 110 days, from 130 days currently.
Yageo would reduce its factory utilization rate for standard passive components to about 60 percent this quarter, from about 70 percent last quarter, to reach its inventory goal by the end of this year or in the first quarter of next year, it said. Passive components such as resistors, capacitors and inductors are integral parts of a motherboard.
“The second half of the year should continue to be challenging. The inventory situation has not really improved. The standard segment continues to weigh on operations,” Yageo chief financial officer Eddie Chen (陳彥松) told investors. “The book-to-bill ratio for premium products stands at about one, but below one for standard products”
On the bright side, Yageo still sees solid demand for premium passive components used in automotive, industrial and networking devices, leading to high utilization of those product lines at 90 to 100 percent, Chen said.
Thanks to its diverse offering, Yageo should be able to “resist” the pricing pressure in the second half of this year when the market is expected to slow, Chen said.The company said it would keep its capital expenditure budget for this year unchanged at NT$10 billion to NT$11 billion (US$334 billion to US$367.4 billion), as it believes the industry is still on track to grow in the long term.