Hua Xin Science's Chao Youheng: Order Visibility is Excellent, Price Increase is 'Inevitable'

Passive component giant Hua Xin Science (2492-TW) Chairman Chao Youheng stated on October 10th that the recent order situation is good, steadily increasing, with excellent visibility. Some products will have demand extending to the end of the year, and in the face of rising costs and tight supply, product price increases are inevitable. Chao Youheng explained that this time's shortage is different from the past, with certain special items being in short supply. The company plans to expand production of various passive components related to AI, and due to the fact that many factory spaces were previously prepared, this expansion will be relatively rapid. Regarding product price increases, Chao Youheng explained that overall costs are rising, such as rare earth prices rising significantly and becoming quite difficult to obtain. Fortunately, the group itself has mastered relevant technical resources. Other costs such as factory construction and labor are also rising, so price increases are inevitable. Some products are in high demand and will be adjusted appropriately according to market conditions. General Manager Tseng Ming-Chan supplemented that the order-to-shipment ratio (BB Ratio) over the past 2-3 months has exceeded 1.8, higher than the previous 1.4 level, with an average order visibility of half a year. AI customers have a longer visibility. From the current products, the demand for capacitors and resistors is also good. Tseng Ming-Chan stated that the production capacity in Kaohsiung, Dongguan in China, and Malaysia is nearly fully loaded, and the company will continue to expand production in the second half of the year to meet demand. It is expected that the overall production capacity will increase by 10% by the end of this year, with annual capital expenditures rising to nearly 4 billion yuan. The company plans to expand production by another 10% next year.