ChenFull International Co., a Taiwan-based component manufacturer serving the aerospace, optoelectronics, and display equipment market, revealed its first-quarter 2023 financial results on May 12. The company reported NT$307 million (US$9.96 million) in revenues, a 38% year-on-year decline, gross margin at 29.41%, and operating profit at NT$53.7 million.
Currently, the optoelectronics and display sector accounts for 45% of ChenFull's sales, while defense and aerospace sectors respectively account for 20% and 10% of company sales.
Despite sluggish shipments in the first quarter, the company expects shipments of optoelectronics and display equipment components to pick up in the second quarter as customers continue to expand OLED production capacities. Meanwhile, customers in the semiconductor sector also requested ChenFull to boost production capacity before third-quarter 2023. When it comes to the defense sector, ChenFull expects sales to regain momentum in the second half of 2023 as the challenge of component shortage continues to ease up. In 2022, ChenFull saw NT$1.78 billion in annual sales. For 2023, it expects a double-digit revenue growth.
Though less than 20% of ChenFull revenues, the defense sector offers the company significantly higher margins compared to other sectors. As a result of its rich experiences in Taiwan's aerospace industry, ChenFull has also developed sophisticated machining and welding capabilities that won it subcontracts from Lockheed Martin, the largest defense contractor in the US.
According to market intelligence platform HigherGov, ChenFull has been a key component supplier of PATRIOT Advanced Capability -3 Missile Segment Enhancement upgrade (PAC-3 MSE) – an upgrade undertaken by Lockheed Martin to improve the Patriot surface-to-air missile system operated by the US military. For fiscal 2021, 2022, and 2023, ChenFull has been in charge of supplying various components, including launch control units, for the PAC-3 MSE.
In the past, Lockheed Martin produced the launch control unit via its Germany-based joint venture, according to ChenFull President C. M. Lai in an interview with Taiwan's Mirror Media, but ChenFull has taken up to 70-80% of the orders owing to more competitive delivery time, production costs, and quality, claimed the manufacturer. To qualify as a Lockheed Martin supplier, ChenFull had to first undergo certification by American Welding Society and become an Accredited Test Facility. Currently, ChenFull has a production line dedicated to Lockheed Martin on site. ChenFull is also in talks with Raytheon Technologies, as reported by Taiwan's media Global View Monthly.
In reference to the recent Taiwan visit from 25 US defense industry delegates, ChenFull expects a breakthrough in cooperation in terms of products and partners, but the associated benefits won't necessarily come in 2023.
