As tariff uncertainties and sharp foreign exchange swings reshape the global automotive supply chain, Taiwanese LED car lighting module manufacturer Excellence Opto (EOI) is facing heightened operational challenges.
Since the start of 2025, a rapid appreciation of the New Taiwan dollar has pressured revenues, with EOI President Fanny Huang estimating that each NT$1 gain against the US dollar could reduce monthly revenue by NT$15 million (US$495,903). However, she emphasized that the impact remains largely theoretical and reaffirmed the company's annual growth targets.
"The recent strengthening of the Taiwan dollar creates a notional revenue decline, but it doesn't materially affect profits unless we convert the currency," said Huang. EOI's revenues and expenditures are primarily denominated in US dollars, insulating the company from immediate profit volatility. Based on an average monthly revenue of US$15 million, the company estimates a NT$15 million notional loss for every NT$1 appreciation.
Huang added that about 50% to 60% of EOI's raw materials are purchased in US dollars, with the remaining 40% naturally hedged, which helps mitigate forex exposure. In contrast to the volatile Taiwan dollar, the exchange rate between the US and Mexican peso, relevant to EOI's factory in Mexico, has remained relatively stable. Local wages there are paid in pesos, further buffering risk.
Amid these challenges, EOI has secured strategic advantages through its manufacturing footprints in Michigan and Mexico, earning trust from global Tier-1 automotive clients. Huang said these relationships are expected to solidify long-term orders through 2027 and 2028.
One key agreement with clients includes a clause that if exchange rate fluctuations exceed 5%, the customer absorbs the difference. The original contracts were based on an exchange rate of NT$29 to the dollar, a threshold that may soon be tested if the Taiwan dollar continues to surge.
Tariff policy remains another wildcard. Huang acknowledged the unpredictability, noting that while most clients are prepared to absorb potential cost increases, some remain cautious. Current pricing does not factor in tariffs, and the company closely monitors developments.
Recent reports suggest US President Donald Trump is weighing temporary tariff exemptions on automotive imports to give manufacturers time to adjust their supply chains. If implemented, such a move could significantly benefit EOI, which has already established production capacity in the US.
"Clients' willingness to shoulder potential tariff costs shows they recognize EOI's importance in the supply chain," said Huang.
Strategic dual-site approach builds client confidence
EOI's dual-site strategy in Michigan and Mexico has positioned the company to support customers looking to diversify production risk, enhance sustainability, and reduce inventory costs. Several clients have committed to increasing order volumes and prices at the Michigan plant, signaling confidence in EOI's long-term reliability.
The company reported that its plants operated at 90% to 100% capacity in the second quarter of 2025. While some clients pulled forward orders to preempt tariff hikes, shipment volumes are tracking in line with original forecasts, with no visible decline in order visibility.
Looking ahead, EOI expects a 15% to 25% revenue increase in the year's second half, driven by seasonal demand and new vehicle launches. Automakers are largely maintaining shipment schedules, but Huang cautioned that potential price increases due to tariffs may dampen consumer appetite.
"Some automakers are passing costs on to consumers, while others are holding prices steady," she said. "The resulting pricing inconsistency could cloud the market and affect buyer sentiment."
Still, she noted, some consumers are advancing purchase plans to avoid future price hikes, offsetting potential declines in demand. "Despite the uncertainty, EOI remains confident in hitting our annual growth targets and sees no signs of needing to revise them downward," Huang added.
In a strategic move, EOI recently announced a corporate restructuring to form "EOI Holdings Corp" (transliteration) via a share swap. The new holding company will drive diversification into industries such as food and beverage and AI, with an emphasis on resource integration and long-term synergy.
Article translated by Elaine Chen and edited by Jerry Chen
