Chin Poon Industrial, a Taiwan-based automotive PCB manufacturer, held an investor conference on Nov. 26 to talk about their views on the future global automotive electronics market.
Based on recent orders and market trends, Chin Poon pointed out that as long as the supply chain can move toward recovery in 2022 the global auto market should see significant growth.
Chin Poon expects its annual revenue in 2022 to grow and already has orders lined up until the end of 2022. However, Chin Poon also emphasized that it is difficult to maintain profit margin as the price of raw materials continues to rise and the TWD exchange rate continues to strengthen. Chin Poon hopes to make up for this through price increase strategies.
Looking back at operating performance in 2021, Chin Poon pointed out that while auto market demand was very good, the global auto supply chain has not been able to recover and keep up. As a result, revenue growth was limited and inventory levels have also slightly risen.
In terms of profit performance, Chin Poon has had to increase prices twice this year in response to raw material costs rising as much as 70% to 80% in 2021. The rising value of the TWD has further eroded profit, which is more difficult to make up for. Continuing to raise prices or improving product assembly are the only solutions. Chin Poon is currently discussing 2022 prices with customers, hoping to successfully minimize the impact of the exchange rate.
Many new vehicles could not be delivered on time this year due to supply chain issues. The industry estimates that there was a supply shortage of 6 to 8 million vehicles in 2021, as actual demand has already returned to normal levels.
Vehicle shipment volume in recent years has been stable since the auto market has a fixed vehicle exchange cycle, according to Chin Poon. But severe problems in the supply chain in 2021 resulted in a huge gap in supply. Chin Poon pointed out that in the US, the price of some used cars has exceeded that of new cars due to insufficient demand to meet the fixed exchange cycle, which is highly irregular. It is possible that the backlog of new car orders can be met in 2022.
Chin Poon also emphasized that final shipment volume will still depend on the recovery of the supply chain. Although order visibility looks good, shipments will depend on post-pandemic growth, whether the global shipping crisis sees relief, and most importantly if the labor shortage is resolved. Chin Poon and several customers believe the labor shortage is a key factor in the supply chain problems, noting that the materials shortage is a result of the labor shortage.
Chin Poon's current production line utilization rate stands at around 80%. In 2022, Chin Poon expects its factory in Taiwan will expand its production on a small scale due to the rising electric vehicle (EV) demand. The company's original plan to expand production at its factory in China is currently on hold due to the power shortage problem. They will continue to monitor the situation before making a final decision. Chin Poon's long-term investment target is Thailand, which does not have the labor and power shortage problems of Taiwan and China. Although Thailand comes with other obstacles such as language, culture and labor transfer issues, Chin Poon will continue to invest in its Thailand factory.
