SUPPLY chain disruptions, Covid-19 induced lockdowns and restrictions did little to dampen the growth of magnetic component producer Superworld Holdings over the past two years.
In fact, 2021 was a bumper year for Superworld – it booked a profit of US$9 million as revenues hit a record high of US$41.6 million. Even 2020 revenues were at US$30.1 million, with a profit of US$4.8 million. “Because we are doing electronics, during the pandemic, it helped us a lot, and we had very good results in 2021 because of it,” said chairman Johnson Chen.
Superworld manufactures components such as inductors, transformers, wireless charging units, connectors and cables. Its products are used across industries, from networking, storage and consumer electronics to healthcare devices. The demands from the push to work from home during the pandemic helped drive Superworld’s outsized performance over the last year.
“Last year, the computing sector was booming for us; we were really seeing a lot of demand from this sector. Because everybody was working from home, the demand for laptops and storage was high,” said Adeline Wong, senior director at the company.
Disruptions and lockdowns
But the pandemic brought along supply chain disruptions and lockdowns that have impacted most electronics companies’ ability to fully ride the boom. Superworld’s backups and nimbleness have helped to continue production and supply components to its customers.
The company’s business encompasses the entire supply chain, from mining ferrite ore to processing raw materials to manufacturing magnetic components. Coupled with its own research and development expertise to develop products and its nimbleness due to its size, Superworld could adapt to the changing needs of the customer. “Because we are an SME (small or medium enterprise), we can be flexible in the business models used to accommodate our customers,” said Wong.
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With the supply of raw materials secured, Superworld also has a system of backups across its different factories such that if one factory has to stop production, another factory can spin up production lines to make up for the shortfall.
The board of directors has also been particular in ensuring that the company has backups not only for factories but staff as well. This has helped Superworld secure more business as its customers would ask the company to fulfil orders that other suppliers could not.
“Even when we had factories that were in lockdown, we were able to cater to customers based on the backup plans that we had,” said Wong.
With offices across the world, Superworld has customers in the US and Europe. However, the company has taken a hit from not being able to have face time with customers when travel restrictions were in place during the pandemic.
The team only managed to travel to the US to meet its customers last month – the first time in about two and a half years since the pandemic started; this was the component manufacturer’s main challenge.
“We try to schedule a lot of Zoom calls, but the result may not be as good as meeting them face-to-face,” said Wong.
Superworld is now looking to expand into the automotive and industrial sectors, as well as find traction for its wireless charging product lines, which are a higher dollar value product. More investment will be put into these segments, as well as a new plant closer to home.
Its customers are increasingly looking for backup manufacturing plants outside of China, and setting up one here in Singapore will help with fulfilling this. Currently, Superworld’s only plant outside the mainland is in Taiwan.
“We have a plan to set up a new plant either in Singapore or Malaysia and will adopt a fully automated production line to mitigate costs,” said Wong.
The automotive and industrial market however is likely to keep expanding for 2022, along with the server market. But the same demand that propelled Superworld last year does not have the legs to do so in 2022.
“2022 is not as promising as 2021, business for electronics has dropped a fair bit, although the first half of the year seemed promising,” said Wong.
The consumer market has seen a significant decline this year, with a key customer of Superworld telling the company that it is badly hurt by the downturn.
In the past year, the consumer industry had over-forecasted demand, leaving everyone with too much in their inventory.
“I don’t see a good first half of 2023, but it will get better in the second half,” said Chen.
Exchange rate fluctuations also need to be accounted for, and Superworld has mitigated the peaks and troughs of forex with agreements with its European customers. Should the exchange rate exceed certain markers, there would be compensation to the customers.
Then there are rising material costs to contend with, as inflation spares no sector. Superworld thus far has been able to increase prices with its customers’ support.
“They allow us to make some fair price adjustments, these are long-term customers who work with us for many years and understand our position,” said Wong.
While supply chain disruptions continue to plague China-based manufacturers, Superworld’s distribution of factories across the north and south of China as well as Taiwan has helped with sudden lockdowns.
Coupled with backups across the different plants, this allows for minimal production downtime as other plants spin up production lines to make up for lost output from impacted plants.
Growing markets
Growing revenue in 2023 will depend on the automotive and industrial sectors, which Superworld sees as growing markets. Expanding the wireless charger product line is also key for growth.
Having entered the market in 2019, the company is now looking to push the idea of higher output wireless chargers to its customers. A phone wireless charger outputs about 7.5 watts, while a wireless charger for a kitchen appliance can output about 600 watts.
With wireless charging, appliances can be cordless without needing a power cable to tether it to a location.
“With wireless chargers, it is a totally different market, and we’re hoping to see more sales in 2023,” said Chen.
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