Kemei Sees Clear Orders in Second Half, AI Server Resistor Shipments Expected to Double for Full Year

Passive component manufacturer Kemei (2375-TW) held its earnings briefing today (27th). The company stated that current orders are clear, with an average book-to-bill (BB) ratio of 1.2 across its three major product lines. Notably, shipments of resistors for AI servers are expected to double year-on-year in 2023.

Kemei currently focuses on resistors as its key product line for AI applications. In the first half of 2023, AI server-related resistor revenue accounted for approximately 8% of total resistor sales. The company continues to advance its production expansion plan for alloy resistors, which are in strong demand for AI and power applications. The related benefits are expected to be reflected in capital expenditures next year.

Additionally, Kemei anticipates that even manufacturers not directly in the AI supply chain will benefit to some extent, as AI applications significantly increase the usage of electrolytic capacitors, solid capacitors, and hybrid capacitors.

Beyond strong AI demand, Kemei has also observed clear signs of demand recovery and inventory replenishment in the automotive and industrial control sectors. Customer inventory levels remain healthy, and lead times for resistors and capacitors have extended, indicating relatively clear order visibility.

Due to rising metal raw material and component costs, Kemei has implemented price increases for different regions and customers. The revised prices have been fully effective since July-August 2023, helping to lift average selling prices (ASP) and mitigate the impact of rising material costs.

Kemei's revenue for the first half of 2023 reached NT$3.009 billion, up 8.6% year-on-year. Gross margin was 18%, down 3.2 percentage points year-on-year. Net profit after tax was NT$200 million, up 30% year-on-year, with earnings per share (EPS) at NT$1.85. Revenue breakdown by product line: resistors 50%, capacitors 40%, and fans 10%.