Global component shortage supercharges Rakon's earnings

Global component shortage supercharges Rakon's earnings

Global chip shortages test device industry as consumer and business demand surges.

Credit: Supplied

Auckland-based component maker Rakon is upgrading to its guidance for the year ending 31 March 2022 as global microchip shortages continue to drive sales.

Rakon told shareholders today it expected to achieve underlying EBITDA in the range of $39 million to $44 million, higher than guidance provided on 1 April of $27 million to $32 million.

Chair Bruce Irvine said that a key factor in Rakon’s expected revenue and earnings surge was significant orders for its TCXO2 quartz crystal resonators, used as the frequency reference for radios and other communication devices.

Demand surged due to a global chip shortage caused by a fire at a factory owned by Asahi Kasei Microsystems (AKM), the world’s largest TCXO integrated circuit manufacturer.

At the same time, there had been a boom in consumer device demand.

“While customer orders were in hand at the time of the 1 April guidance, we also needed to factor in a number of risks and uncertainties around our ability to deliver and at what cost," Irvine said. 

"These included having to add the necessary manufacturing capacity; procurement of raw materials and parts; adapting design specifications and other production uncertainties. 

"However, over the last five months these risks and uncertainties have not materially eventuated.”

Irvine said for the remainder of 2022, Rakon's core business was expected to perform well, particularly in 5G where demand for products going into network equipment had been stronger than anticipated. 

However, the company was still experiencing supply chain volatility and was mindful of the risk of future disruption at manufacturing sites due to Covid-19.

Looking further ahead to 2023, Rakon expected TCXO demand to return to normal levels, and its core business to continue to grow on the back of 5G rollouts and the demand for Rakon products in datacentres, industrial positioning and space.

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Tags PCsmicroprocessorsComponentsrakon5Gmicrochips



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