Passive components maker Yageo has seen its inventory for MLCCs and chip resistors hit the lowest levels in nearly 10 years and will properly raise prices to reflect increased costs, according to company chairman Pierre Chen.
Yageo now has less than 30 days of inventory for both MLCCs and chip resistors, Chen said, adding that the firm's supply capacity remains tight with a B/B ratio at 2 although the coronavirus outbreak has driven down demand by 20%.
He said Yageo will properly hike quotes to counter increases in labor and transportation costs caused by the epidemic in China, where the company maintains 70% of its total production capacity, compared to 30% in Taiwan. But he did not indiccate when and how much the quotes will be hiked.
Chen also disclosed Yageo has seen its overall capacity utilization reach only 35-38% in February and expects the rate to rebound to 50% in March before picking up further later.
He said Yageo is facing challenges in recruiting new employees after the outbreak but will continue offering incentives such as higher bonus to encourage more employees to return and better attract new workers.
Market demand for passive components will increase significantly for 5G applications but inventory levels at most makers are relatively low, with supply to become increasingly tight, Chen said. He continued that it remains to be seen whether the mounting cases of coronavirus infections in Japan and South Korea will affect production of major makers Murata and Semco.
Chen made the remarks when meeting the press following the firm's extraordinary shareholders meeting. The meeting approved Yageo's proposal to issue 80 million new common shares to raise funds for floating global depository receipts, which institutional investors in Kemet can purchase to become shareholders of Yageo, which will acquire the US passive components maker.
Yageo chairman Pierre Chen
Photo: Shihmin Fu, Digitimes, February 2020
Article translated by Willis Ke
