China Week in Review

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21296-chemcut115x44[1].jpgBy Wei Chen, I-Connect007Tripod's Gross Profit Rate over 20% in 2Q; Compeq to Turn a Profit

With difficult times apparently passed for most PCB makers, some companies forecast a much improved third quarter. Tripod raised its capacity utilization rate from 77% in the first quarter of 2008 to nearly 90% in the second quarter, raising the gross profit rate to 20%. With the proportion of HDI products on the rise, the profit rate should continue its climb in the third quarter.

Due to a low utilization rate, Tripod conducted capacity relocations by closing Plant 4A and Plant 5 in Wuxi, mainland China, and transferring HDI orders to Plant 2 in Wuxi and another plant in Taiwan. With the restructuring, the capacity utilization rate should rise from 77% to 90%--driving the gross profit rate to 20% in the second quarter.

The main drive of the company's performance so far this year comes from DRAM module boards, optoelectronic boards and HDI products. The company will increase the proportion of both DRAM module boards and optoelectronic boards from 22.8% and 22.7% to 25% and that of HDI to 15% from 13%. The profit rate in the second half will climb with the improvement of the product portfolio.Compeq's performance remained weak in April and May. Boosted by new models of products, as well as new customers, orders for the company appear to be solid through the end of the year. Shipments of mobile phone PCBs are projected to reach 44 million units with 50% year-on-year growth in the second quarter. Total revenue generated was NT $5.406 billion, up 42% from same time last year. Although affected by the CCL price increase, the gross profit rate slipped only slightly to 10.9%. Compeq expects to turn a profit for the quarter.

Nearly 50% of Compeq's orders come from Nolia, while the proportion of Motorola's orders dropped to 15%. With new orders from Apple coming in the second half of the year, the rigid-flex PCB segment of the company will be running at full capacity. Mobile phone PCB shipments in 2008 are expected to be 185 million units--a 15% year-on-year growth. 

Source: PCBCity

Iteq Dabbles in Power Supply Market

CCL maker Iteq entered into a joint agreement with Laird Technologies last year, giving Laird access to Iteq's high volume lamination capabilities and Asia Pacific distribution. The agreement also gave and Iteq access to Laird Technologies' high performance T-lam materials.

With the technology and materials now in hand, Iteq will begin producing thermally conductive laminates for power supply manufacturers initially. The added value will be 10 times that of traditional substrates.

Source: TPCA

Lenovo Tripled Profit in 2007

China-based PC manufacturer, Lenovo, posted tripled net profit in the fiscal year ended March 31, 2008. Turnover also increased by 17% year-on-year. The company's 6.7% global market share made it the fourth largest PC maker in the world.

During the last year, the company generated US $484 million net profit, giving US $5.51 cents earnings per share, which was US $1.87 cents in the previous year.

The profit hike was due to the company's global sales increase. From April 2007 to March 2008, the company posted a US $16.3 billion turnover. Market research company Gartner Consulting's statistics show that Lenovo ranks fourth in the industry, with HP, Dell and Acer ahead in the rankings with market shares of 18.3%, 14.9% and 9.5%, respectively. The average sales growth of the industry was around 16%, while Lenovo grew by 22%.

In 2005, Lenovo bought IBM's PC division for US $17.5 billion to strengthen its global presence. In 2007, the company also intended to acquire European PC maker Packard Bell, but rival Acer offered a better price and grabbed the contract.Souce: PCBCity

News in China published last weekComputer-Use PCB Prices on the Rise Notebook PCB and motherboard PCB makers are following the trend to increase product prices--a trend started by notebook outsourced manufacturers. Notebook PCB makers are planning to raise their prices by 10 to 15% while motherboard PCB makers may increase prices by 5 to 10%. These increases are set for the third quarter of 2008 and companies, such as GCE, Hannstar Board, Tripod and Yufo, are expected to benefit.

Affected by the price hike in raw materials, new labor laws and regulations and the restrictions on expansion of Taiwan-based PCB companies in mainland China, many major companies would see costs rise by 3%. The total capacity of notebook- and motherboard-use PCBs has remained relatively stagnant for the past three years. Looking to supply and demand in the third quarter of 2008, PCB makers are gradually informing customers of the possible price increases to come.  Uniplus Closes NT $300 Million Company Bond Case  Taiwan-based CCL maker, Uniplus, announced yesterday that the company has closed the case of raising NT $300 million by issuing company bonds. The capital raised will be used to repay bank loans. The company board originally proposed the capital raising project at the end of October of 2007.

Uniplus generated NT $4.48 million profit after tax in 2007, posting NT $0.02 earnings per share. Although the company reported a loss in the first quarter of 2008, Uniplus forecasts positive growth this year due to the price increase seen in the CCL market during the second quarter.



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