Network device maker Unizyx Holdings has seen its customers turn cautious about business prospects as the risk to the global economy is growing, fueled by the ever-rising inflation, according to company CEO Gordon Yang.
Clients who had previously stayed positive over the business outlook have altered their views in the last two weeks, turning more conservative, although a reversal of the supply-demand situation has not been seen, Yang said.
Yang added that most clients are concerned about their business prospects for the coming six months.
Yang suggested that the aggressive monetary measures adopted by central banks worldwide to curb ever-rising inflation have undermined consumers' confidence while also affecting business operations at enterprises.
The changing economic environments have also impacted some telecom clients, which had been placing steady ODM orders previously.
But Yang insisted that clients are not holding back their orders, saying that the supply of network chips and related devices remains tight, and clients are still willing to place long-term orders.
Some industry sources pointed out that the delivery lead times for some critical network chips still stand at over 50 weeks, enabling the industry to enjoy clear order visibility lasting 9-12 months.
But Yang said that the changing attitude of clients requires attention, noting that some clients may be double-booking their orders in the face of tight chip supply, adding that not all of the orders will be fulfilled, which may result in a rise in inventory levels at related makers.
In fact, Unizyx has seen a rise in its inventory level. As of the first quarter of 2022, Unizyx saw its inventory value reach NT$6.704 billion (US$227.94 million), increasing 7.92% from the previous quarter and 47.34% from a year earlier.
However, other fellow companies, including Sercomm and Arcadyan Technology, are still confident about the market demand.
Demand for networking devices will become even solid after the post-pandemic era, driven by broadband and network upgrades required under new living and learning styles and by the new infrastructure establishments initiated by governments around the globe.