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Yageo to invest NT$10 billion in Kaohsiung

2018/11/09 15:39:32

Yageo Chairman Chen Tie-Ming CNA file photo

Taipei, Nov. 9 (CNA) Yageo Corp., one of the leading passive electronics makers in Taiwan, is planning to invest NT$10 billion (US$325 million) in Kaohsiung over the next three years, the company said Friday.

In a statement posted on the Taiwan Stock Exchange, where Yageo shares are traded, the company said it will use the NT$10 billion in capital expenditure to upgrade its technology over three years and roll out high-end passive components in the southern city.

Passive components refers to a wide range of electronic items such as chip resistors, inductors and multi-layer ceramic capacitors (MLCC) used in the production of many consumer electronics devices.

On its website, Yageo said it is the largest chip resistor supplier and the third largest MLCC supplier in the world.

Currently, Yageo operates seven production bases in Kaohsiung, as well as Suzhou and Dongguan in China, while it operates 27 sales offices in 17 countries around the world.

According to a report released by Apple Inc. in March, four of the plants in Kaohsiung, Dongguan and Suzhou are among the U.S. consumer electronics giant's top 200 suppliers.

As part of its three year investment program, Yageo said a board meeting on Friday approved a proposal to spend NT$790 million to buy a plot of land in Kaohsiung's Dafa Industrial Park owned by the Ministry of Economic Affairs to build a new plant.

As to the 6,300 ping (one ping equals 3.3 square meters) site, Yageo said, total floor area at the new plant is expected to hit 16,000 ping.

The NT$10 billion investment will cover the cost of land and plant construction, purchase of production equipment and environmental protection needs, Yageo said.

At a time when some Japanese firms are withdrawing from large and medium-sized MLCC production, Yageo has decided to expand production to fill the void, the company added.

In addition, Yageo said it remains upbeat about future demand for high-end passive electronics components, in particular from clients in the automotive electronics industry. On that basis it was decided to increase investment to meet future demand.

Yageo said its continued concerns over the escalating trade friction between the United States and China also prompted the decision to allocate more resources to Taiwan in a bid to offset the impact.

With buying sparked by the investment plan, Yageo shares outperformed the local main board, rising 1.54 percent to close at NT$329.00 on the Taiwan Stock Exchange Friday, with the weighted index ending down 1.16 percent at 9,830.01 on renewed fears over Washington-Beijing trade tensions.

In the first 10 months of this year, Yageo posted NT$67.25 billion in consolidated sales, up 162.3 percent from a year earlier on the back of an increase in passive component prices on the global market.

In the first half of this year, Yageo recorded NT$35.85 in earnings per share, sharply up from NT$3.10 in the same period of last year.

(By Chung Jung-feng and Frances Huang)