Daphon's Earnings Call: MLCC Shortage and AI Power Business Drive Optimism for Second-Half Performance

Daphon (8163-TW), a computer peripherals manufacturer, held its earnings briefing today (4th). CEO Tsai Yao-Kun stated that the company remains optimistic about its second-half performance, driven by tight supply in the MLCC passive components market and the surge in AI-related demand. While challenges such as component shortages, power constraints, and rising raw material costs remain on the radar, the company's operational momentum across business units continues to align with expectations.

Regarding MLCCs, Tsai analyzed that major Japanese and Korean manufacturers have shifted production capacity toward AI servers, causing supply-demand imbalances in high-voltage and high-capacity specialty products. This has led to extended lead times and price increases. Daphon’s current capacity utilization is very high. New equipment ordered last year will be gradually deployed in August and September, timely boosting production capacity for the second half.

The green energy business is actively working on inventory reduction and transformation. Tsai expects vehicle and raw material inventory adjustments to conclude by year-end, allowing operations to return to a healthier, leaner state next year. In response to intensifying competition in the sub-$1,000 e-bike market, the company will shift its strategy toward higher-priced products and expand into non-bicycle applications such as industrial equipment, robotics, and drones.

To capture the vast opportunities in AI data centers, Tsai explained that Daphon’s acquired subsidiaries, Haichang Electronics and Quanjing, will integrate power, thermal management, and existing battery technologies to develop three key components. The company plans to initially target edge devices and early-stage customers, aiming to establish a new growth pillar for its AIoT business group.

On the market-watched Backup Battery Unit (BBU), Tsai noted that AI data centers are now operating at voltages exceeding 800V, demanding extremely high safety and reliability standards for batteries. Daphon aims to increase its share of large mobile batteries for industrial and robotics applications within the next 1–2 years, with the long-term goal of entering the server BBU large battery market.

For medium- to long-term financial performance, Tsai and CFO Lin Feng-Cheng emphasized that Daphon will pursue lean consolidation of facilities and optimize its product mix, appropriately passing on material cost increases to customers. The company targets maintaining an overall gross margin above 18% and advancing toward a 20% high-quality profitability goal.