Rakon’s profit forecast jumps on back of computer chip shortage

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The global shortage of computer chips has lifted the fortunes of local manufacturer Rakon.

A fire at a plant in Japan has resulted in increased orders for Rakon. (file pic)
Photo: 123RF

The company, which produces chips for 5G telecommunications networks and devices, has significantly upgraded its full year underlying profit guidance to be between $39 million and $44m, up from between $27 million and $32m.

Rakon chair Bruce Irvine said the upgrade follows significant orders the company had received for its products as a result of an extensive chip shortage caused by a fire at one of the world’s largest manufacturing plants in Japan.

“There has also been a concurrent consumer device boom,” he said.

The shortage had disrupted production for vehicle companies and electronic makers worldwide, and had driven up the costs for local manufacturing firms who make specialist products.

Irvine said there was a number of risks that may affect its ability to deliver those products and their cost.

“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.”

The company expects demand for its products to stabilise in the next financial year.

Its core business will focus on growth based on various 5G rollouts and the demand for Rakon’s technology in data centres.

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