Quick Take – Taiwan Supply Chain
While we highlighted April results for Taiwan’s display producers last week, which were decidedly poor, we take a quick look at some of those in the Taiwan display supply chain to see how the Chinese lockdowns have affected April results. Not all suppliers in the list below saw reduced April sales in keeping with the poor results see by display suppliers, as polarizer suppliers BenQ 8215.TT) and ChengMei (4960.TT) are booked through the end of June, although BenQ indicated that it is wary of 3Q prospects as price competition has increased considerably in recent weeks. In most cases the reasoning given for the drop in April sales were the lockdowns in China, which limited availability of components and complicated logistics.
The general feeling (our read) is that in the best case scenario is for a somewhat better 3Q as inventory levels are brought down this month and next, and while the build for the holiday season will be lower than originally expected, it will begin in July and help boost m/m sales results. That said, it seems that those suppliers that were able to secure longer-term contracts and held higher component inventory levels have been able to sustain results through April, but will face weak y/y results in 3Q if the lockdowns continue. We expect while China will continue to publicize its ‘No-COVID’ lockdown policy it will ease up on transportation restrictions for key industries going forward. Lockdowns are certainly beneficial toward keeping COVID from becoming a country-wide epidemic in China but they also limit growth, especially in the areas where China is trying to maintain a competitive edge over Vietnam, Indonesia, and India..
Radiant Opto (6176.TT) – Backlight Supplier – Sales ↓51.3% m/m, ↓43.3% y/y
Global Lighting Technologies (4935.TT) – Display Light guide supplier – Sales ↓54.7% m/m, ↓55.1% y/y
BenQ Materials – Polarizer supplier – Sales ↑1.3% m/m, ↑3.6% y/y
ChengMei Materials – polarizer supplier – Sales ↑15.1% m/m, ↑21.7% y/y
Lite-On Opto (2301.TT) – LED supplier – Sales ↓9% m/m, ↑1% y/y
The general feeling (our read) is that in the best case scenario is for a somewhat better 3Q as inventory levels are brought down this month and next, and while the build for the holiday season will be lower than originally expected, it will begin in July and help boost m/m sales results. That said, it seems that those suppliers that were able to secure longer-term contracts and held higher component inventory levels have been able to sustain results through April, but will face weak y/y results in 3Q if the lockdowns continue. We expect while China will continue to publicize its ‘No-COVID’ lockdown policy it will ease up on transportation restrictions for key industries going forward. Lockdowns are certainly beneficial toward keeping COVID from becoming a country-wide epidemic in China but they also limit growth, especially in the areas where China is trying to maintain a competitive edge over Vietnam, Indonesia, and India..
Radiant Opto (6176.TT) – Backlight Supplier – Sales ↓51.3% m/m, ↓43.3% y/y
Global Lighting Technologies (4935.TT) – Display Light guide supplier – Sales ↓54.7% m/m, ↓55.1% y/y
BenQ Materials – Polarizer supplier – Sales ↑1.3% m/m, ↑3.6% y/y
ChengMei Materials – polarizer supplier – Sales ↑15.1% m/m, ↑21.7% y/y
Lite-On Opto (2301.TT) – LED supplier – Sales ↓9% m/m, ↑1% y/y
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