Taiwan forecast to become world's No. 1 chip-resistor supplier in 2004

Taipei, March 24, 2004 (CENS)--Taiwan is very likely to unseat Japan as the world's No. 1 supplier of chip resistors this year as a result of their output expansions compared with Japanese suppliers' reductions, the government-backed market research program Industrial Technology Information Service (IT IS) estimated.

Last year, Taiwan's top three suppliers of the devices-- Yageo Corp., Ralec Electronics Corp. and Ta-I Technology Corp.--commanded a combined 30% share of the world market last year, with their focus on 0603-type wares. In the market, Japanese suppliers, Taiwanese suppliers' nearest rivals, focus on 0402-type 0201-type devices, which are more profitable than 0603-type devices.

Chip resistor, inductor and electrolytic capacitor are the major three passive-electronic components. Currently, demands for 0402-type resistors mostly come from telecom-equipment and notebook-computer suppliers.

Last year, leading South Korean chip-resistor suppliers announced that they would reduce their outputs. Japanese suppliers are estimated to shrink output by 10 billion devices a month in the near future. The Taiwan's top three suppliers have planned to expand outputs by a total of 10 billion resistors a month.

Taiwanese industry insiders expected orders for the devices to flow to Taiwan soon from Japan on grounds that Japanese suppliers have largely scaled down their outputs and lost competitiveness to Taiwanese suppliers.

They pointed out that price slumping on chip resistors has eased since the third quarter last year and the prices of some types have even rebounded since the fourth quarter last year. Many Taiwanese suppliers have shifted product emphasis to the more-complicated 0402-type resistors from the commodity 0603-type and 0805-type wares. Last year, many Taiwanese suppliers boosted defect-free ratio of their output of 0402-type devices to over 90%, making them more competitive than Japanese suppliers.

Ralec began boosting 0402-type resistors last year at its mainland Chinese factory by 15% to 23%. The company expected to maintain its gross profit margin at over 30% this year thanks to weighing output of 0402-type devices and lower production costs.

Orders from BenQ, Vishay and Hon Hai Precision will be the major force to drive up Ralec's business growth this year. The Taiwanese chip-resistor suppliers will team up with a second-tier Japanese supplier on production of 0603-type and 0402-type resistors.

IT IS estimated chip resistor, inductor and electrolytic capacitor to post growth for the first time in three years, at 4.5%, 3.5% and 2%, respectively, this year thanks to recovery of the world electronics business. Also, inventory backlogs of the three devices at retailers have been cleared and the output capacities have not increased over the past two years.