Capacitor maker Apaq to expand factory site Malaysia

Apaq Technology, a specialist in solid electrolytic capacitors, has acquired land adjacent to its existing plant in Malaysia for a second phase expansion, with construction expected to be completed in the fourth quarter of 2025.

On August 21, Spaq Technology held an earnings call, where CEO ST Lin shared a positive outlook for the company. After achieving record-breaking revenue in 2023 and strong performance in the first half of this year, Lin anticipates continued growth in the third quarter, driven by the widespread adoption of AI applications and robust server demand. This momentum is expected to extend into 2024 and 2025.

Apaq has supplied V-chip and CAP to US-based server providers and is actively expanding its production capacity. The company aims to increase its monthly output from 300 million units in 2023 to 500 million units by 2028. Notably, the growth in V-chip and SP-CAP production is expected to be particularly significant.

Lin expressed confidence in Apaq's V-chip technology, asserting that it rivals that of Japanese giants. The company's pricing advantage is crucial in its ability to outcompete these Japanese firms. Additionally, Apaq has been swiftly closing the production gap with Panasonic, a leading Japanese capacitor manufacturer, in the CAP segment.

Industry sources indicate that CAPs used in AI servers must meet strict high-temperature operating standards. While Panasonic produces 20 million CAPs per month, Apaq's monthly output is 40-50 million units, with plans to increase this to 70 million by 2025.

CAPs are mainly used alongside GPUs, with each GPU requiring about 20 SP-CAPs, a component that yields substantial profit margins. Although AI servers are not expected to contribute significantly to Apaq's revenue in 2024, the higher unit price and increased usage compared to traditional servers are expected to push the company's gross margin above 50%.

As AI server adoption accelerates in 2024, Apaq's earnings are projected to rise further. Notably, besides securing orders from Nvidia, Apaq is also in discussions with AMD regarding capacitor supply.

Lin expressed optimism about the future growth of the automotive hybrid business. The company is entering the international automotive market through OEM partnerships and expects significant results by 2026-2027.

This promising outlook stems from a collaboration with Tai-Tech Advanced Electronics, an inductor manufacturer. Tai-Tech is helping Apaq acquire customers, while Apaq has secured a portion of the land for the second phase of Tai-Tech's factory in Johor Bahru, Malaysia, which is slated for completion by the end of 2025. Both companies expect strong demand from European and American clients.

Source: Apaq, August 2024

Article translated by Jingyue Hsiao