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The
maker of printed circuit boards (PCBs) is investing half a
billion euros on a Chinese plant in an effort to compete with
the likes of Samsung and Foxconn in producing ever smaller and
smarter chips to address the needs of a digitally connected
world.
The so-called inter circuit substrates the factory will produce
are designed for use in high-end applications for tablets,
medical devices and navigation systems, Chief Executive Andreas
Gerstenmayer told Reuters.
The third phase of the site's operational start-up is slated for
the autumn and Intel, the world's leading chipmaker, is set to
be among the first customers, helping to justify an investment
that equates to nearly two thirds of AT&S's revenue last year.
"We see ourselves strategically very well positioned for growth
and hope that the new site in China will break even at the end
of the next business year," Gerstenmayer said.
"Then, we also plan to exceed the 1 billion euro mark (in
revenue)."
Industry experts such as consultant McKinsey forecast
significant growth for PCB technologies required for connected
vehicles, intelligent factories and digital healthcare.
BCC Research expects the global market for PCBs to reach nearly
$74 billion in 2021, compared with about $61 billion last year.
The new AT&S plant is located at the technology hub in Chongqing,
where the company hopes to benefit from China's drive to build a
local high-value semiconductor industry to challenge global
chipmaking rivals.
State-of-the-art microchips can help to offset the effects of
slowing growth in the smartphone market, where AT&S has been hit
by a drop in orders from Apple, said Hauck & Aufhaeuser analyst
Tim Wunderlich.
AT&S chief Gerstenmayer forecast sales growth of up to 12
percent for the current financial year to March 31 but warned
that earnings would be squeezed by the ramp-up costs in China.
Last year's EBITDA margin of 22 percent could fall to 18
percent, he said.
AT&S shares, which moved up to Austria's ATX index in March,
were up 3.7 percent at 10.43 euros by 1221 GMT, outperforming a
2 percent gain for the index as a whole.
($1 = 0.9026 euros)
(Reporting by Kirsti Knolle; Editing by David Goodman)
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