Yageo purchases Schneider Electric’s sensor business for 723 million euros – Taipei Times

• By Lisa Wang / Staff reporter

Yageo Corp (國巨), the world’s third-largest multilayer ceramic capacitor supplier, said that it had acquired France-based Schneider Electric’s sensor business in a deal worth about 723 million euros (US$788.26 million).

The acquisition of Telemecanique Sensors early this month matched Yageo’s shift in strategy to offer premium products, the company said in a statement on Tuesday.

Yageo expects the deal to broaden its product portfolio and raise its gross margin substantially next year, given that Telemecanique Sensors focuses on making higher-margin chips for industrial devices, the company told investors during an online conference on Oct. 26.

Photo: CNA

Yageo’s gross margin fell to 33.2 percent last quarter from 38.5 percent a year earlier, as weak demand resulted in lower factory utilization.

However, the company said it remained on target to boost gross margin to 40 percent in the long term.

Telemecanique Sensors — a leading global specialist in the design, development and delivery of mission-critical electromechanical and electronic sensors — registered a compound annual growth rate of 5.5 percent in revenue over the past three years, with annual revenue averaging US$330 million, the statement said.

North America and Europe are its biggest markets, contributing about 70 percent to Telemecanique Sensors’ revenue, Yageo said.

Telemecanique Sensors operates five manufacturing sites in France, Indonesia, Mexico and the US, it said.

Yageo said it is still grappling with a severe inventory correction cycle, which has depressed customer demand, adding that it would take another one or two quarters for customers to deplete excess inventory before needing to restock.

Unlike previous downcycles, it is taking longer than expected for customers to digest inventory, as sluggish demand from the Chinese market has compounded already unhealthy inventory levels and weak end-demand in the post-COVID-19 period, Yageo said.

Yageo CEO David Wang (王淡如) said this quarter and next quarter would mark the trough for the firm.

Revenue this quarter would contract about 5 percent sequentially, Wang said.

In the best-case scenario, next quarter’s revenue could reach a similar level to this quarter, he said, adding that the forecast did not factor in benefits from acquiring Telemecanique Sensors.

Overall, Yageo saw its book-to-bill ratio improve to about 1 this quarter, he said.

The improvement was more evident in its commodity products, which had seen the book-to-bill ratio drop below 1 due to sagging demand, he said.

Demand for high-end products has been stable, he added.

Demand from the computer segment, which includes notebook and desktop computers, smartphone and telecom-related devices, continued to diminish this quarter, Yageo executive vice president of global sales and marketing Claudio Lollini, said.

However, demand for components used in servers, vehicles, and industrial and medical devices is increasing, Lollini said.

Gross margin would be flat this quarter on a sequential basis, while utilization would also be the same as last quarter, with equipment usage for premium products remaining at about 70 percent, Wang said.