Flaircomm Microelectronics, Inc. (ASX: 301600) stated in response to investor inquiries that the rise in storage chip prices is a common issue currently facing the industry. This round of price increases for storage products has been substantial, placing pressure on the product supply chains of downstream vehicle manufacturers. To ensure the stability of their supply chains and mitigate risks associated with potential future price hikes and shortages of key components, these downstream automakers have intensified their stockpiling efforts and made advance payments. This has driven a significant increase in the company's revenue scale and operating cash flow. There is a certain time lag in the process of cost pressures moving down the industrial chain. However, over a longer period, the cost pass-through will gradually materialize and is not expected to have a long-term impact on the company's overall profitability. Overall, the company is less affected by this factor compared to other industry suppliers, and the overall impact is manageable. Excluding the influence of this factor, the growth rate of the company's recurring business profit is essentially in line with its revenue growth. From an industry structure perspective, raw material price increases have a relatively limited impact on leading manufacturers. Instead, they may accelerate the consolidation of smaller industry players, driving industrial resources to concentrate towards leading firms. The company consistently adheres to its strategy of deeply cultivating its niche sector and positioning itself as a leader in its specific segment, which provides it with strong risk resilience. In terms of response measures, the company has established a comprehensive, refined supply chain management system. Firstly, it implements a differentiated procurement model for core materials and auxiliary materials, with core materials independently controlled by the company to ensure supply chain stability. Secondly, leveraging its platform-based and modular R&D design, it can achieve rapid backup and smooth replacement of core components, effectively hedging against supply chain price fluctuation risks. Thirdly, by flexibly adjusting inventory and procurement rhythms and maintaining close collaboration with upstream and downstream clients, the company works together to absorb the impacts of cost fluctuations.
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