Walsin Technology Gains Strength in Chip Resistor Game

Taipei, April 4, 2006 (CENS)--Walsin Technology Corp.'s president, Y.Y. Chu, estimated the company's monthly revenue to surge 40% to NT$1.4 billion (US$43.7 million at US$1:NT$32) beginning this June or July, thanks to a number of capacity expansions including the recent acquisition of a Japanese rival.

The current No.2 supplier of passive electronics components in Taiwan has revenue of around NT$1 billion (US$31.2 million), compared with No.1 player Yageo Corp.'s NT$1.6 billion (US$50 million) or so.

Chu said his company recently acquired control of Kamaya Electric, a chip-resistor subsidiary of Japan-based Mitsubishi Materials Corp. (MMC), as well as MMC Electronics Taiwan Co., Ltd., for NT$1 billion. Walsin has also completed expansion at its Kaohsiung factory.

Kamaya and MMC Electronics have combined revenue of NT$2.4 billion (US$75 million), and Kamaya alone has recently reported a gross margin of 23%. Kamaya produces high-performance 0201 and 01005 resistors, which have average selling prices three times that of Walsin's. Chu expects the two acquired companies to inject a combined NT$240 million (US$7.5 million) into Walsin's monthly revenue beginning next quarter.

Walsin's recently completed Kaohsung factory, Chu estimated, would begin to add revenue at a rate of NT$10 million (US$312, 000) per month in April. The factory is designed to have a maximum output capacity of 80 million resistors valued at NT$40 million (US$1.25 million) per month. The capacity is projected to run at 50% by this June or July.

Walsin's revenue from chip resistors now averages around NT$300 million (US$9.3 million) a month, compared with Yageo's NT$400-500 million (US$12.5-15.6 million). The acquisition is expected to draw Walsin's revenue close to Yageo's.

For last year, Chu's company reported after-tax earnings of NT$735 million (US$22.9 million) and a gross margin of 24%. In the fourth quarter alone, the company's earnings of approximately NT$400 million (US$12.5 million) were more than the total it earned throughout the first three quarters.

Chu pointed out that the company's revenue for the first quarter this year declined from a quarter earlier, but its earnings were not changed much in the meantime thanks to a successful product-mix strategy and hikes in average selling prices.

However, the company's ceramic-powder affiliate, Prosperity Dielectrics Co., Ltd., reported a net loss of NT$147 million (US$4.6 million) by booking NT$143.6 million (US$4.5 million) in asset losses.