Fan maker Yen Sun thinks growth lies in high-end computer cooling.
European car manufacturers have initiated workforce reduction plans in recent months. The news has come against a backdrop of the noticeable slowdown in the year-on-year growth rate of electric vehicle shipments.
Some automotive parts suppliers are approaching 2024 with caution. However, the fan manufacturer Yen Sun Technology remains optimistic about significant growth in car fan shipments in 2024, mainly driven by European demand. Despite the recent downturn in the Chinese car market, Yen Sun anticipates single-figure growth opportunities
Yen Sun's general manager Robert Liu said this does not necessarily indicate overall optimism in the automotive market. Rather, it reflects the company's ability to capture more customer orders in the same field after competitors have exited the market.
Liu said while his company's operations are expected to grow in 2024, the extent of growth is still difficult to estimate.
Yen Sun primarily focuses on automotive seat fans and has expanded its product line to include other automotive-related cooling products. Its main customers are from Europe, and in recent years, it has actively cultivated the Chinese car market.
Revenue contributions from Chinese car manufacturers account for 35% of Yen Sun's automotive business. In 2023, automotive revenue accounted for 42% of the company's total revenue, followed by high-end computing at 34%, consumer technology at 17%, and industrial equipment at 7%.
Liu said that European automotive customers have benefited from competitors exiting the market. These customers have shifted orders to Yen Sun, he added.
This has led to the addition of 1-2 new projects. Revenue growth in the company's European automotive business is expected.
Growth in the Chinese automotive business is also anticipated, but there are many variables due to the intensity of internal competition, said Liu. Domestic competition is leading to significant instability in orders, he added.
Some customers place orders for 50,000 units to discover that the model is discontinued the following month, Liu explained. In other cases, companies might announce an increase in shipments in April, only to later request design changes.
Yen Sun has prepared to meet the increase in demand for server cooling for AI servers, Liu said. In 2023, revenue from server-related products accounted for 9-10% of the company's total revenue, he added.
Liu said that Yen Sun's main partners are not server brands but server ODM manufacturers. The company is developing CDUs (Cooling Distribution Units) capable of dissipating heat of 5KW or more to meet the demand for water-cooled heat dissipation, he added.
Liu said that for CDU plate heat exchangers, they will collaborate with suppliers. Due to Yen Sun's long-term relationships with cooling system suppliers in the home appliance industry and its many years of experience in water-cooled mainframes, the demand for plate heat exchangers is much higher than other immersion cooling manufacturers, he added.
In 2023, Yen Sun's revenue was NT$3.633 billion (around UD$114 million). This is a decrease of 0.24% compared to the previous year.
The gross profit margin was 16.6%, down by 1.58% year-on-year, and the operating margin was 1.46%, down by 3.29% year-on-year, Lie explained. The slight decrease in gross profit margin was primarily due to an unstable supply of automotive ICs in the first half of 2023, affecting shipment schedules, he added.
However, in the fourth quarter of 2023, Yen Sun saw a gain of NT$268 million from the disposal of shares in Shanghai Yen Sun driving the annual after-tax net profit to NT$292 million. This was an increase of 50.08% year-on-year, with earnings per share of NT$4.08.
Looking ahead to 2024, the continued demand for high-end computing cooling and contributions from automotive cooling orders are expected to maintain growth momentum.
