Walsin Technology: Passive Component Supply Tight, AI Application Share to Reach 20%

James Tseng, President of Walsin Technology Corporation, a passive component manufacturer under the PSA Group, stated today (12th) that the passive component market is experiencing supply shortages, and the supply-demand gap may extend to 2028. Walsin's own book-to-bill (B/B) ratio has increased this year, indicating that orders continue to outpace shipments. Walsin is continuously expanding its resistor and capacitor production capacity, with an expansion rate of approximately 10% to 15%.

Looking at AI applications, Tseng estimated that the share of AI applications in Walsin's overall revenue could rise to 15% to 20% this year.

Regarding pricing, Tseng noted that the company had previously adjusted prices for some resistor and capacitor products based on market conditions such as costs and specifications. It plans to renegotiate prices with some customers in the third or fourth quarter.

Walsin held its shareholders' meeting in Taoyuan today, approving resolutions including a cash dividend of NT$2.5 per share. Tseng spoke with the media after the meeting.

Commenting on the impact of the recent strong earthquake in Mindanao, southern Philippines, on local passive component factories, Tseng said he has not heard of any changes in the industry.

Regarding the passive component market outlook, Tseng pointed out that Walsin's own book-to-bill (B/B) ratio has increased from the previous 1.2-1.3 to 1.3-1.4, indicating that orders continue to outpace shipments and overall market demand is increasing. This is primarily driven by AI industry demand from large and ultra-large enterprises, which differs from consumer electronics applications.

Looking at the supply-demand gap for passive components, Tseng said it is necessary to observe the memory supply situation. He expects the passive component supply shortage to continue until 2027 or even 2028. The expansion rate next year is expected to be higher than this year. The company plans to double the capacity of special resistors like thin-film resistors, expand general resistor capacity by 10% to 15% annually, and continue to increase capacitor capacity.

Regarding this year's operations, Tseng said that in addition to growth in shipments for AI applications, shipments for communications and power applications are also stable. Automotive revenue has grown by 20%, driven by shipments of resistors and MLCC components. Capital expenditure for this year is expected to increase to NT$3 billion.

On product utilization rates, Walsin explained that the average capacity utilization rate for capacitors is about 80% to 85%, and for resistors, it is about 85% to 90%. Walsin continues to expand capacity, including for resistors. It is estimated that resistor capacity will expand by 10% this year. Equipment is continuously being installed in capacitor factories, and the company plans to expand capacitor production line capacity by about 15%, including at its factories in mainland China.

Analyzing the delivery time for multilayer ceramic capacitor (MLCC) equipment, Tseng noted that delivery times for Japanese manufacturers' equipment are about six months to a year, while delivery times for mid-to-low-end equipment are about three to six months.