Chip resistor orders and supply healthy

    Taiwan-based chip resistor manufacturers Ta-I Technology and Ralec Electronics have indicated that orders are strong prior to the Lunar New Year holidays and shipments to clients have been smooth thanks to new capacity going online since the end of 2010.

       Ta-I and Ralec saw their sales decrease 10-15% sequentially in the fourth quarter of 2010, due to slowing orders. The companies also estimated their gross margins for the quarter would contract by more than 3pp, affected by exchange rate variations.

       Ta-I's and Ralec's shipment valuations are pretty much all based on US dollars, and their expenditures for material purchases are denoted in Japanese yen.

       Market sources expect Ta-I and Ralec to post flat revenue growth sequentially in the first quarter of 2010, as customers' inventory adjustments come to an end. Ta-I and Ralec both responded saying order visibility is currently at three weeks, and replenishment demand after Lunar New Year will need to be monitored.

       In addition, Ta-I, Ralec and other fellow chip resistor companies are willing to allocate more capacity to large-size products on favorable prices, according to industry sources. Shortages of 0603 and above chip resistors, which had surfaced due to suppliers' tight capacity, eased recently.

       In other news, Ta-I's deployments in new businesses are expected to bear fruit in 2011. Sales of protective components are set to account for 20% of the company's total revenues in 2011 from 15-16% in 2010. Meanwhile, shipments of its LED heat sink substrates will climb substantially this year