AT&S takes cautious line on mainland expansion
Austria Technologie & Systemtechnik (AT&S), Europe's biggest maker of printed circuit boards, plans to take a cautious stance on expansion in China because of economic uncertainties.
The company, capitalising on the explosive growth of the country's mobile-telephone demand, has invested US$700 million on the mainland in the past decade.
Its businesses there now account for 60 per cent of total revenue.
But chief executive Andreas Gerstenmayer was not overly optimistic about the growth potential, stressing the importance of properly assessing the future demand before making decisions on expansions.
'It's important to be conservative now,' Gerstenmayer said yesterday. 'We don't invest until we clearly see the demand.'
AT&S is among few global firms that are not keen on fast expansion into the mammoth market.
The company that started building its first mainland facility in Shanghai in 2001 broke ground for its second plant in Chongqing earlier this year.
The first phase of the Chongqing project will be operational in 2013, but Gerstenmayer would not forecast a timetable for the construction of the planned second and third phases of the facility, citing the cloudy outlook.
He said China's economic outlook was uncertain because it 'heavily depends on overseas demand'.
AT&S, which produces high-end printed circuit boards used in mobile phones, digital devices and the automotive industry, has utilised its Shanghai facility to full capacity, producing 710,000 square metres of the boards a year, enough to supply about 160 million mobile phones.
Its Shanghai plant is the world's largest facility specialising in HDI (high-density interconnect) boards.
When the first phase of Chongqing facility begins operation, it will churn out 220,000 square metres of HDI boards.
The company was determined to slow further capital expenditure, planning to bring down its debt-equity ratio to 80 per cent in the next financial year from April from the current 95 per cent, Gerstenmayer said
China has 859 million mobile subscribers by the end of last year, or 64 per cent of its population, according to the National Bureau of Statistics.
In the three months to September, AT&S reported record quarterly sales of Euro131.4 million (HK$1.41 billion) and posted an operating profit of Euro15 million.
The company predicts sales for this financial year to reach at least Euro535 million, up 10.3 per cent from last year.
The ratio of mobile phones to the number of people on the mainland, according to the National Bureau of Statistics