Passive components maker Yageo Corp expects the acquisition of two European sensor companies to add about NT$13 billion (US$403 million) to its revenue next year, helping the company broaden its product offerings to high-end sensors used in automotive and industrial devices.
The sensor market is a new area for Yageo, the company said.
The new acquisitions would also help the company better shield against industrial downturns and economic headwinds, as its premium products are less volatile than standard passive components used in consumer electronics.
“The acquisitions will accelerate Yageo’s expansions into premium markets such as the automotive segment, allowing the company’s operation to better weather downturns,” Yageo chairman Pierre Chen (陳泰銘) told an investors’ conference in Taipei.
High-end products are to account for 80 percent of the company’s total revenue following the transactions, compared with 75 percent currently, Chen said.
Additionally, Yageo this year could hit its target of boosting automotive-related product revenue to 22 percent, one year earlier than expected, he said.
Chen made the remarks after the company last month unveiled plans to acquire German sensor supplier Heraeus Holding GmbH and France-based Schneider Electric’s Telemecanique sensor business for NT$2.84 billion and NT$12.4 billion respectively.
The firm has a good chance to complete the transactions in the first half of next year, he said.
With higher revenue from premium products, Yageo does not expect to experience the significant drop in gross margin seen by its peers, Chen said, adding that local competitors generated more than 90 percent from standard passive components, and saw gross margin dip to just above 10 percent from 30 percent.
“Companies with high exposure to standard products are going to experience a tough time during the next two years,” he said.
The passive component industry is entering into an inventory-driven downward trend, although excessive inventories in supply chains are expected to level off in the second or third quarter of next year, Chen said.
Yageo has been trying to enter the sensor market since 2015, he added.
The company now has grown into the world’s No. 3 maker of passive components through 20 mergers and acquisitions over the past two decades. Revenue expanded to NT$106.54 billion last year, surging 58 percent from 2020.
Yageo operates 42 factories in 28 countries. About 80 percent of its 45,000 employees are based abroad.