Taiwan's leading precision metal stamping specialist, G-Shank Enterprise, reported that revenue from non-3C applications—such as automotive, medical, and industrial sectors—grew to 56% in the first three quarters of 2024. This diversification fueled both revenue and profit growth for the company, while AI-related applications will serve as the primary growth driver in 2025, according to President Ying-Shou Lin.
Speaking at the company's recent earnings call, Lin explained that negative market impacts, such as inventory buildup due to the pandemic, have gradually eased. As long as there are no new wars or financial crises, the industry appears to have moved past its low point, with market conditions set to improve. Current order visibility varies by sector, with 3C (computer, communications, and consumer electronics) product orders at around 1-2 months, automotive-related orders at 3-5 months, and industrial orders falling between these ranges.
Lin emphasized that AI will be the strongest driver of growth in 2025, with G-Shank supplying essential metal components for AI data centers, such as battery backup systems, which are projected to contribute about 15% of total revenue. This demand also supports orders for related AI connectors, with order visibility for these AI-related products extending into the second quarter of 2025.
To meet increasing customer demand, G-Shank is expanding its production capacity across three locations: Guanyin, Taiwan, Huizhou, China, and the Philippines, each with a specific operational role. The Guanyin plant will initially absorb space-intensive production lines from the older Bade facility. The Huizhou plant is set to take over capacity from the Shenzhen facility, with operations slated to start by the second quarter of 2025. The new Philippine plant, focused on fulfilling orders from new customers, is expected to launch by the third quarter of 2025.
Lin highlighted that G-Shank currently operates 16 facilities worldwide, including nine in China, three in Taiwan, one in Mexico, and three across Southeast Asia (Thailand, Malaysia, and Indonesia). Approximately 60% of the company's production capacity is in China, with Taiwan and Southeast Asia accounting for the remaining 40%. While China's share remains higher, this capacity primarily serves the Chinese domestic market, Lin said, adding that establishing production lines in Taiwan and the Philippines is to balance overall capacity distribution.
Lin also indicated that the combined benefits of overall revenue growth, increased shipments of high-value AI products, and cost reductions through process improvements raised the gross margin to 32.9% in the third quarter of 2024. The company expects further improvements in gross margin as new production lines and processes come online.
Article translated by Willis Ke
