In response to the ongoing Sino-US trade war, the giant passive component manufacturer will launch a hedge plan to invest back in Taiwan and plan to invest tens of billion yuan to build a new factory in Kaohsiung.
Guoju is the world's largest chip resistance factory, accounting for about 34% of the market. It is also ranked as the third largest MLCC factory in the world, accounting for about 13%. With technological capabilities, we should not miss the opportunity to strive for the Japanese factories and villages to withdraw from some product lines due to the shift of product strategy, the empty market cakes, and the impact of the Sino-US trade war, the market giants will launch a hedge plan and set up factories in hunting grounds. However, Guo Ju did not respond to the news for 7 days.
According to the national giant plan, the monthly output of chip resistors is expected to reach 120 billion by the end of the year, MLCC will expand to 50 billion by the end of the year, and MLCC related monthly capacity will increase by another 10 billion by the end of the year, that is, by the end of 2020, the monthly output will reach 70 billion.
Industry insiders pointed out that even if Guoju will continue to increase MLCC monthly production capacity by about 20 billion in the past two years, it will not be able to fully meet the demand gap left by Murata's subsequent main shift to high-end lathe gauge products, fading out of the high-capacity MLCC and the general MLCC product market for automobiles, leaving 30 billion monthly supply and demand gaps.
After signing long-term contracts with many OEM customers, about 70% of Guoju's performance will be contributed by long-term customers for two years. It is expected that the downstream customers will be affected by trade warfare factors, planning to set up factories in Taipei, and if Guoju cooperates with the layout of customers, it is also a reasonable consideration.
The Sino-US trade war has become the biggest variable of passive component group performance this season. This season was traditionally off-season, coupled with the uncertainty of the environment, downstream demand turned to tighten, resulting in sharp decline in October performance of factories. Guoju, Huaxinke and other passive component factories expect that the fourth quarter performance will not only decrease compared with the previous quarter, but also decrease in season. The degree may be quite obvious.
Passive component factories estimate that this adjustment may continue beyond next year's lunar calendar year, and that the first quarter of the past year will be higher than the fourth quarter of the previous year. Next should be no exception. The Sino US trade war brings short-term headwinds, and the long term prospects of the whole passive components are still promising.
The passive component industry believes that the trade war has disrupted the layout of the industry, and downstream customers have begun to adjust their inventories. They might have prepared for two months, but now they have only one month or even lower stock. The market still does not know how the future will evolve and is full of uncertainty. Therefore, they are conservative and wait-and-see attitude. And it may be an over conservative state. However, as long as the factors of Sino-US trade war are successfully lifted, the market will rebound substantially, but it is still impossible to say when the trade war will end.