(ATF) Taiwan-based Delta Electronics, a manufacturer of power and other components to companies such as Apple, has bypassed supply chain blockages and geopolitical tensions by ordering semiconductors early and slashing its China workforce.
A surge in demand for consumer electronics has driven a global chip shortage that has idled car factories in particular, but also affected other technology sectors.
Delta chairman Yancey Hai said the company was one of the few unaffected by the shortages, saying they had planned ahead. “We’re not affected at the moment. Our orders went to chipmakers very early. So the impact for us is so-so,” he told reporters on the sidelines of a company event in Taipei.
The company’s third-quarter net profit rose 63.6% year on year to NT$8.39 billion (US$296.53 million). Sales totalled NT$282.6 billion (US$10 billion), up 5% on a year earlier.
“Looking ahead, we remain positive on revenue momentum in the first half of 2021, driven mainly by power electronics, electric vehicle components and the automation segments,” Steven Tseng, information technology analyst at Daiwa Capital Markets in Taipei, said.
Delta, which includes Singapore’s powerful GIC sovereign wealth fund among its major shareholders, makes a range of devices that control the flow of electricity in consumer electronics, including cooling fans for notebook computers, solar inverters and motors for electric cars. Its products are also used in computer servers.
PANDEMIC BOOM
Taiwan’s tech firms, a key part of the global supply chain, have boomed on the back of demand for tablets, laptops and other equipment during the Covid-19 pandemic, which has forced millions to work and study from home.
Delta produces about two-thirds of its products in China, but indicated it was scaling back its operations there due to rising tensions between Beijing and other nations, as well as the rising cost of labour in the world’s second-largest economy.
“Our target in China is to reduce the direct labour force by 90%. We are not quite there yet. We have reduced [it] by 40%,” Hai told the Financial Times in an interview.
The company already relocated production of its telecommunications equipment division to Thailand after the US imposed a 25% import tax on such devices made in China.
Delta is also building four large factories in India, where the company plans to make photovoltaic inverters and industrial automation equipment.
“For China the problem is, even without the US-China conflict, China is no longer a good place for manufacturing,” Hai said. He said wages in the southern city of Dongguan were 10 times their 1992 level, adding that employee turnover was much less in India than China.
With reporting by Reuters
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