Flexible PCB specialist Flexium Interconnect has turned conservative about its sales prospects for the second quarter and all of 2022, due to concerns about supply-chain disruptions caused by COVID lockdowns and restrictions in the Chinese cities of Kunshan and Shanghai.
The company said its April 2022 capacity utilization at manufacturing facilities in Kunshan has reached only 60-70% of its corresponding level in 2021, which, coupled with logistics stagnation, is undermining its overall shipments in the second quarter of the year. And its actual performance will hinge on how the local government will enforce its anti-epidemic measures.
The company's first-quarter 2022 revenues slipped 22.7% sequentially but rose 33.1% on year reaching NT$9.493 billion (US$323.11 million), and net earnings declined 40.2% sequentially but surged 51.5% on year to NT$783 million.
Its gross margin for the quarter dipped 3.9pp sequentially and 1.4pp on year to 15.9%, due mainly to the rises in shipment ratios for products with high material costs as well as low-price offerings for PC applications, the company said.
Company tallies show that handset and communication applications contributed 51% of its first-quarter revenues, down from 56% for fourth-quarter 2021. The corresponding revenue ratio for PC products rose to 39% from 30%, and that for consumer applications dropped to 10% from 14%. The company expects FPCB shipments for PCs to grow faster than those for handsets this year.
Flexium originally estimated the capacity utilization at its Kunshan plant to drop to 40-50% in April and May, but the actual rates may be even lower as strict city lockdown has barred entry of some production workers and key components, the company said, adding that it can now only deliver small-volume shipments to clients.
It also noted that the revenue ratio for its flexible antenna boards and modules arrived at 22-27% as targeted for the first quarter, but their revenues can hardly grow significantly this year as the top-end LCP (liquid crystal polymer) materials are still not much adopted by clients due to 5G networking not popular yet.
Flexium said it will not roll out more new offerings for high-frequency transmission, automotive ADAS and low-orbit satellite applications until 2023, and product portfolio improvements next year will bolster its profitability.
