Among the thousands of partners providing Chinese telecommunications giant Huawei Technologies, there is an almost anonymous Japanese company called Taiyo Yuden. When President Donald Trump banned Huawei on May 16, the company stock plunged 10%, erasing gains from the record earnings and stock repurchase.
Company director Shoichi Tosaka is of course unhappy about this: he thinks investors are too pessimistic about them. In an interview in Tokyo, he explained that only less than 10% of Taiyo Yuden's revenue came from Huawei and the company could easily replace any revenue shortage thanks to demand for capacitors. their power.
Their microcapacitors are being used in hundreds of electronic devices and supply is in short supply so they won't have any problems finding other buyers.
Mr. Tosaka said: "Even if we lose orders from Huawei for broadcast stations and smartphones, another company will also make those devices and we will get that business. Stocks seem to be unconnected with our income. "
He also built a company that could avoid sanctions from the US-China trade war. He can get rid of US tariffs on Chinese goods when the company has a range of manufacturing facilities in Malaysia, the Philippines, South Korea and Japan, not just China.
The capacitors made by Taiyo Yuden are becoming bricks for today's modern world. Made from metal plates and insulators, capacitors are used in electronic circuits to stabilize voltage and current and are now present in all electrical and magnetic devices. smartphones, TVs, refrigerators to even electric cars. According to Tosaka, an electric vehicle with Tesla's self-driving mode uses about 10,000 capacitors.
Demand for capacitors increased and eliminated the impact from Huawei was the cause of 16 out of 21 analysts linked by Bloomberg to recommend buying Taiyo Yuden shares, after the company stock fell 6% on May 13.
Taiyo Yuden's micro capacitors.
Currently Taiyo Yuden has succeeded in reducing dependence on smartphones, when expanding its supply to both cars and other industries. Currently, revenues from automotive supplies and other industrial applications account for 39% of their total revenue, helping the company achieve record high income even when smartphone demand deteriorates.
Currently Taiyo Yuden's factories are running almost at full capacity to meet the needs of their multi-layer ceramics. The lack of supply has made GoPro unable to achieve its production target and drags Murata to increase its component prices by 30% last year. Taiyo will spend tỷ 150 billion (about US $ 1.3 billion) in the next 3 years to boost production, but in the near future, Mr. Tosaka expects supplies to remain tight.
The company expects revenue to increase 6% this year to 290 billion yen, a new record. Operating profit will increase 8% to 38 billion yen, thanks to increased demand for automotive components, broadcast stations and data centers. The company is also promoting investments of up to 45 billion yen to build two new factories in Niigata, northern Japan.