Smartphone sales have not met expectations this year due to a variety of factors, including the COVID-19 pandemic, semiconductor and component shortages, and rising costs.
Order visibility for the second half of the year is unclear and material shortages continue to be a problem, according to supply chain sources.
Several known brand factories have already extended part of their mass production period for smartphones to the first quarter of 2022 from the fourth quarter of 2021.
Even Apple CEO Tim Cook warned at the end of July of the potential effects supply chain shortages could have.
Entering into September, it seems this problem remains unresolved. While it appears everything is on schedule, consumers may not actually have in hand the new-generation iPhone until late 2021.
Zhong Yang Optical (JMO), the largest mobile phone mold factory in Taiwan, pointed out that their mobile phone mold business accounts for the largest percentage of its revenue.
The company expects a good second half, with marked improvements in order shipments for June, July, and August compared to the first quarter. Order shipments for September also look good. This, along with increased quantities of in-vehicle panoramic lenses, lenses for advanced driver assistance systems (ADAS), LiDAR, and new client projects are driving growth.
Momentum for NB molds and some mold and sputtering orders for clients remains unchanged. The outlook for IP cameras in the third quarter is not as good as the first half of the year. However, overall, the company remains cautiously optimistic.
JMO's cumulative revenue from January to July of this year reached NT$811 million (US$29.2 million), an on-year decrease of 19.86%. This is mainly attributed to the slowing of mobile phone clients connected to its mold business, as well as downstream shortages causing order shipments to be deferred.
In regard to the supply chain shortage problem, JMO said if companies could acquire their own raw materials, such as plastic pellets, it would help limit the impact.
Since JMO's business scope is not as large as others in the industry, and also possibly because they are able to get higher prices, they are unlikely to run out of materials.
Although material shortages on the client side have not been resolved, because molds are part of the upstream supply chain, JMO must still take into account the learning curve of its back-end lens yield and reserve time for entering mass production of electronic manufacturing service (EMS). As a result, pull-in in the second half of the year will surpass that of the first half.
In terms of production capacity allocation, JMO indicated the application scope for non-mobile-phone lenses is seeing good growth as a result of development trends in the industry. The company is also actively expanding into new domains, such as unmanned vehicles and automotive use.
Production capacity at JMO's subsidiary company Eterge Opto-Electronics, which specializes in in-vehicle lenses, has become insufficient. To remedy this, the company leased a new factory near its headquarters in Taichung. The 500-ping factory is expected to formally be completed in September. With the new factory, Eterge hopes to be able to increase its original production capacity by 30% to 40%.
Looking forward to the group's future development in the next five to 10 years, JMO purchased a 2,366-ping land plot to build a new factory. The factory is currently in the planning stage.
Production lines within existing factories in Taiwan are being adjusted. JMO is also considering the purchase of a new factory in China, which would mainly focus on assembly lines, but also have a portion for mold production capacity.
Article translated by Eifeh Strom
