Delta Electronics (Thailand), the country's largest electronics company by market capitalisation, is set to invest between US$500 million and $1 billion to expand its manufacturing and R&D capacity over a five-year period, with the majority to be allocated to Thailand, says chief executive Victor Cheng.
In an interview with the Bangkok Post, Mr Cheng said the capital expenditure of over $500 million would be spent in Thailand, India and Germany. New factories would be built in Thailand and the Indian city of Krishnagiri in Tamil Nadu state, while an existing R&D facility located the German city of Soest will be expanded over a period of three to five years.
At present, Delta has six factories located in Thailand's Wellgrow and Bangpoo industrial estates, and two more are to become operational by 2026. The company's capital expenditure stood at nearly $200 million in 2022 and $345 million in 2023, he said, adding that the company employs 27,000 people worldwide.
The outlay would be spent on products related to electric vehicles (EVs), power supply, engineered solutions and systems related to business, said Mr Cheng, who took the helm at Delta Electronics (Thailand) on Jan 1, 2024.
Automated production line for networking products at a Delta plant in Bangpoo industrial estate.
"The overall electronics sector on the Stock Exchange of Thailand has seen a slow start to the year with limited near-term visibility due to volatile market conditions," he noted. "Despite the sector being subdued, Delta remains a strong investment choice. Our proven track record of business profitability and financial resilience positions us well to navigate market volatility."
There are potential bright spots for specific segments within the electronics industry. Delta is well-positioned to capitalise on the e-mobility trend, Mr Cheng noted.
This year, Delta expects its total revenue to grow by 15-20% over 2023 when the company posted an all-time high turnover of $4.1 billion.
Mr Cheng said revenue increased 23% last year despite there being a softer growth momentum towards the last quarter due to cautious EV power business demand and concerns over a looming global recession.
"Net profit also reached an all-time high of $524 million, up 21% over 2023, driven by the revenue uptrend, operational excellence in managing expenses, and record non-operating gains," he added.
"We believe the demand for essential infrastructure will remain strong and our businesses in data centres, telecom power and the EV sectors are well-positioned," Mr Cheng said, adding that growth opportunities are projected in Southeast Asia and Australia for Delta's energy infrastructure and industrial automation solutions businesses.
"We anticipate an acceleration in growth for several major economies compared to 2023. There are signs of improved business sentiment, rising consumer spending, increased trade and investment activity, accommodative monetary policies, and fiscal stimulus packages supporting economic recovery."