Yageo subsidiary: Huawei orders dropped by 30% due to the trade war

Chilisin, an inductor manufacturer under Yageo, admitted that the company's related orders to Huawei, one of its customers, have indeed decreased by 30% due to US sanctions. However, because the overall order amount of Huawei is not large, the reduction is about NT$10-20 million (same unit below), which is a very small proportion considering the company's monthly revenue of about NT$1.3 billion.

      Chilisin held a shareholders' meeting on the 5th. Shareholders were also very concerned about how Chilisin would respond to the trade war. General Manager Zhong Shiying said that the company has a decentralized layout including inductors, resistors and magnetic materials.

      Among them, Chilisin Inductors set up a factory in Vietnam three years ago. However, the consideration at that time was that the production capacity of Chinese manufacturers was full. Based on the concept of risk diversification, it was decided to set up a factory in Southeast Asia, and finally decided on Vietnam. After three years of hard work, the Vietnam factory has also achieved quite good results.

      Zhong Shiying also pointed out that, as of now, when Mexico is subject to additional tariffs by the United States due to illegal immigration issues, Vietnam's advantages will become more prominent.

      In addition, the production areas of Wangquan are distributed in Kaohsiung, Taiwan, Kunshan, China and Malaysia. Previously, due to the increasingly stringent environmental protection requirements in China, the production capacity was gradually moved to Malaysia. At present, the production capacity ratio between Kunshan and Malaysia has been adjusted from 2:1 to 1:2. As for the magnetic materials of Feixie, they are mainly from Poland.

      Zhong Shiying pointed out that the proportion of Chilisin's direct deliveries to the United States is not high. Most of the products are delivered to assembly plants and then shipped to the United States after assembly. Therefore, the tariff issue will not directly affect Chilisin. The only thing we need to observe is whether terminal demand will decline due to the trade war.