With Catcher announcing a capex cut for 2016, sources from the upstream supply chain expect other metal chassis makers to also halt their capacity expansion plans and wait for demand to recover.
Compared to plastic chassis demand, which is suffering from oversupply, metal chassis continued to see strong demand during the past few years, prompting related makers to expand their capacities and improve technologies in order to stay on top of the competition. However, with demand weakening, makers are expected to decelerate their capacity expansions to prevent oversupply.
Foxconn Technology had been reducing its capex from NT$3.85 billion (US$115.69 million) in 2010 to only NT$1.13 billion because Apple has been gradually shifting its chassis orders to other partners to avoid risks and the company is also seeing its orders for cooling modules and games console assembly dropping.
However, both Catcher and Foxconn Technology have over 20,000 CNC machines, allowing them to stay on top of the competition. Pegatron Technology's subsidiary Casetek has also been expanding its capacity in the past couple of years. Casetek spent NT$1.01 billion in 2014 on real estate, facilities and equipment and spent NT$2.35 billion in the first three quarters of 2015 to expand its number of CNC machines to 10,000.
Although metal chassis makers have stopped purchasing new equipment, most of them are still constructing new facilities in China, preparing for Apple's new iPhone products for the second half of 2016 as these facilities take at least 18 months to be finished and put to work.
Article translated by Joseph Tsai
