Anticipated surge in NT dollar to potentially impact Advantech's revenue
Rewritten Article:
By Meryl Kao
Money talks, and for Advantech Co (研華) chairman K.C. Liu (劉克振), it's whispering about a potential hit to their revenue and earnings per share. At a news conference in Taoyuan, Liu expressed concerns over the increasing New Taiwan dollar (NTD), highlighting its potential to leave a bearable mark on Advantech's finances.
"The NT dollar's surge is not our friend," Liu said, noting that Advantech's revenue could experience a decent drop, thanks to the NT dollar's role as the reporting currency in their financial statements. As a result, the earnings per share and share price might take a slight tumble too, but the lost ground, Liu assured, would be regained from other sectors.
Advantech's business is primarily transactions-driven in overseas markets, but the company trades in US dollars. An appreciation of about 3 to 5 percent in the NT dollar leads to foreign exchange losses, adversely impacting profits, Liu revealed. Yet, he assured that the impact is bearable.
The NT dollar exchange rate stood at NTD 30.145 against the US dollar yesterday, having shot up 2.96 percent. Over the past two sessions, the currency has gained an impressive 5.85 percent against the greenback.
Liu was also questioned about the potential impact of US tariffs. His response: the company and its clients will share the costs, with Advantech taking on a partial share. The US tariff rate for Taiwanese goods might not reach the feared 32 percent and could instead hover around 15 to 20 percent, Liu said, suggesting this scenario wouldn't be a crisis for Advantech.
The US-made counterparts of Taiwanese-made industrial computers are hard to come by, and the tariff uncertainties will eventually pass, Liu asserted, making the situation non-critical.
To tackle the anticipated revenue decline, Advantech is focusing on the application of cutting-edge artificial intelligence (AI) and software systems to deliver higher value for customers. The company is also expanding its footprint in southern California, with half the land reserved for future growth. Advantech has been assembling large system products in northern California for two decades.
Some board members have suggested setting up surface mount technology (SMT) plants in the US to sidestep high import levies, but the move would come with labor, cost, and flexibility considerations, Liu mentioned. The complex, low-volume, and diverse nature of SMT production would also necessitate sending experienced supervisors abroad, potentially hiking expenses.
Looking ahead, as the demand for edge AI computing and artificial intelligence of things rises, Advantech aims to expand its presence in the smart factories, energy, retail, and hospitality sectors. The company will showcase edge AI applications at the Computex Taipei trade show from May 20 to 23, featuring autonomous robots, robotic arms, and service robots developed with partners.
- The escalating New Taiwan dollar (NTD) could leave a bearable yet significant impact on Advantech Co's finances, as the NT dollar serves as the reporting currency in their financial statements.
- The increasing strength of the NT dollar could potentially cause Advantech's revenue to experience a decent drop, leading to a slight decline in earnings per share and share price.
- Advantech's chairman, K.C. Liu, mentioned that an appreciation of around 3 to 5 percent in the NT dollar could result in foreign exchange losses, which would adversely affect Advantech's profits.
- Advantech's business primarily involves transactions in overseas markets, but they trade in US dollars. However, Liu assured that the impact of the rising NT dollar is bearable, despite its potential adverse effects on their revenue and profits.
