Industrial Material  

Champion Motorsport
The revenues of Nan Ya Plastics totaled US$5.194 billion in 2004, an increase by 29.9% from US$3.999 billion of 2003. The profit before tax for the same year was US$1.416 billion, an increase by 154.4% from US $0.565 billion of 2003.

In the first half of 2004, increase in the demand of various products was seen due to the global economic recovery. Together with the rise of the raw material price, the domestic economic condition ameliorated. Yet, the economic growth turned conservative as uncertainties arose in the second half of the year after the soar of oil price, rise of interest rate and the economic regulation of China. Though the situation was uncertain, we adhered to our long-standing spirit of inquiring into the root of the matter and where there's a will, there is a way, and continued with various reforms to strengthen our business structure, cut costs and enhance production efficiency and product quality to overcome operation difficulties and optimize operation performance. In the area of plastic products, though it was difficult to shift the cost of some products due to the increase of raw material price, the income and profits gradually increased as the demand of the Sixth Naphtha Cracker (SNC) specialty chemicals grew stronger after the completion of the BPA plant when the overall yield and price increased. In the area of electronic materials, sales grew extensively due to the demand of downstream PCB makers increased. Profits from sales of fiber products grew steadily as the EG demand of upstream manufacturers increased. As a result, the overall incomes and profits increased significantly.

Nan Ya Plastics primarily manufactures plastics, fiber and electronic materials. In the area of plastic products, total domestic consumption of PVC resin in 2004 was 370,000 tons, nearly the same as the year before. As the selling price increased, the overall sales performance of plastic products in 2004 outperformed that of 2003.
The Operating Revenue Comparison
(UNIT:US$ 100 Million)

NPC Mailiao INA Plant
Attracted by the cheap labor, low land cost and open policy, many tertiary plastic processing businesses moved to China and acquired raw materials in the local markets. As a result, demand of domestic secondary products decreased, and the condition was increasingly difficult. Coupled with rise of the petrochemical material price, it was difficult to shift the cost of secondary products. 

Therefore, in addition to transferring the production of some traditional plastic products to our China subsidiary in order to provide proximate supply of raw materials to local Taiwanese investments and Chinese customers, the parent company in Taiwan has launched a transformation as a response to the changing and adverse business environment. 

It included enhancing competitiveness by streamlining operation scale, enhancing utilzation, simplifying labor force, reducing production cost; accelerating the development of high-quality environmental special and value-added products using new materials and offering new applications; establishing close cooperation with international customers to capture the market trend, to develop new products, and to expand the scope of plastic application, in order to maintain the profitability of plastic processing products by means of market segmentation. Secondly, growth in the SNC specialty chemicals such as BPA, 1,4BG, DOP and INA, was seen as the price of petrochemical raw materials increased. 

Thanks to start production of the new 100,000 tons/year BPA plant in Q3 of the year when the demand was running high, we could take the opportunity to boost incomes. Also due to the addition of new capacity of specialty chemicals and the de-bottlenecking program, sales of petrochemical products increased annually, the income earned will account for an increasing percentage of our overall profit.

NPC Mailiao EG Plant
Since most domestic tertiary processing factories have moved to China and the factory investments of local competitors, it has become an area of the fast-growing demand of plastic products. To provide timely service to local customers, to ensure proximate supply of raw materials, to capture the changes in local markets, we have erected many plastic product plants in different parts of China over the years.

Such as the flexible PVC sheeting and rigid PVC film plants in Guangzhou and Nantong, and the PU synthetic leather, casting PVC leather, engineering plastics and UP resin plants in Huizhou that have been operating in full-capacity, these plants have been making profits due to the transfer production out of the optimal arrangement of cost control and supply and demand balancing through flexible dispatch of production-sales between Taiwan and China, and the active cultivation of local markets.
Our flexible PVC sheeting and rigid PVC film plants in the United States are facing threats from competitions of Asian imports and the rise of raw material price. 

Aside from making continual improvement in lead-time and quality, enhancing production efficiency, streamlining production scale and reducing cost, we have adjusted the product mix in accordance with the local market and customer needs to boost sales and seek further development of the company.

Nanya PVC sheeting is used
as walling and tablecloth
Total sales volume of polyester fiber products in 2004 was to 660,000 tons, 3.7% less than last year. Though it was difficult to shift the cost due to the soar of oil price, the capacity expansion of China, and the increase of raw material price, growth in both sales and profits of our fiber products was seen despite the high cost thanks to the success in the R&D and promotion of value-added fiber products, such as fine denier polyester fabrics, microfibers, full dull draw texture yarn etc. which were highly recognized by the customer.rs.

On the other hand, the EG (upstream material of fiber) supply was critical as the demand increased due to the capacity expansion of China fiber plants. Together with the soar of international oil price, the price of petrochemical material rose accordingly. The EG price thus kept running high. Fortunately, our EG plants with a combined capacity at 870,000 tons/year could manage to fulfill both internal and export demands. Moreover, coordinating with the phase VI expansion project of the SNC, we are expanding an EG plant with a capacity of 600,000 tons/year. After the completion of the plant, the combined EG capacity will increase to 1.47 million tons/year and will create sizable contribution to company profits.

Our polyester fiber plant in South Carolina with capacity at 860,000 tons/year generated revenues amounting to US$0.92 billion in 2004. It preliminarily produces conjugate staple fiber and PET chips. Together with the rise of raw material price and the increase in demand, both the price and quantity increased. While the sales of specialty products, such as conjugate staple fiber and carpet staple fiber of higher added value, increased, we saw growth in the overall performance. Our upstream raw material EG plant in Texas with capacity at 350,000 tons/year chiefly supplies raw materials to our polyester fiber plant in South Carolina and sells materials to other plants.
Because of rising EG prices, both revenues and profits increased in 2004. Part of the polyester fiber plant with capacity at 240,000 tons/year constructed in Dongnai, Vietnam, under joint venture with Formosa chemical & fiber corporation was completed and started production. 

The China polyester fiber plant project is currently under progress and will be completed and start production in 2006.

NPC Jingshin Plant
The global economic recovery shed new light on the electronic material market in 2004. Leading electronics, information and communication companies launched operational structure integration and introduced new products to the market. Together with the rebound of the demand of PCs, mobile phones and optoelectronic products, the demand of upstream electronic materials of PCB was vigorous. The shortage of copper clad laminate (CCL), fiberglass cloth and expoxy resin was serious, the demand kept rising, the selling price inflated monthly. As a result, both revenues and profits grew significantly. To ensure the growth of the company in keen competitions, we provided quick and reliable delivery and post-delivery services, kept close attention to the supply and demand condition, made timely adjustment to the sales strategy and product mix, reinforced technology development and product certification, launched active cooperation with leading manufacturers in Europe, the USA and Japan, and promoted the sales of products with higher added value and performance in addition to taking the cost advantage of vertical integration. Secondly, to accelerate the China market cultivation, we sent more staffs to China and established agency relations with local agents in order to expand our channels for winning more contracts and to provide proximate supply of materials. For example, our Kunshan complex has started production of various upstream electronic materials, such as CCL, glass fiber cloth, glass fiber yarn, epoxy resin, etc. To cope with the increasing demand, we have planned expansion projects for these plants. After the completion of the project, we are sure that the product range will be fuller and the revenue will growth extensively.

The continual recovery of the electronic industry worldwide in 2004 has boosted the growth of the PCB industry. After transforming into a manufacturer of higher level circuit boards, Nan Ya Printed Circuit Board Corporation, a spin-off of Nan Ya Plastics, enter the high-level product market with competitive technology and cost advantage. Furthermore, we saw growth in revenues as it won orders of higher level circuit board from Japan and the USA. The company has changed its direction toward products of multiple niches and continued to cultivate world leading packaging service providers to improve its technology of flipchip and to accumulate experience in mass production. 

It also participated in collaborative development, test run and certification projects of world leading manufacturers, such as the next generation CPU and chipsets with Intel, and other circuit boards for use on communication products, mobile phones and vehicles in order to enhance competitive strength. The capacity of the Kunshan PCB Plant in China has been expanded to 7.2 million sq. inch/year to produce traditional PCBs and provide proximate material supply to local downstream assembly plants. In response to the augmenting market demand, the expansion of the plant to 10.8 million sq. inch/year is under progress. Taking the advantage of mutual support between China and Taiwan, we will demonstrate the strength of mutual support through centralization of management to create more profits.

Nan Ya printed circuit board.

Nanya Technology Corporation
and Inotera Memories, Inc.
Looking into 2005, the global economy will grow slowly due to the soaring oil prices, rise of interest rate, fall of the US currency in the foreign exchange market, and the economic regulation of China. As the global situation often affects the domestic economy, and together with the imbalance of the domestic industrial structure and the increasingly keen global competitions, our processing-based businesses will be facing a harsher time. To overcome these difficulties, we will review and strengthen the competitiveness and future development of processing products for the upgrading and optimization of all processing products. 

Furthermore, in order to strengthen operations for higher profits by adjusting the development of the company, we will focus on the R&D of specialty chemicals of higher profits and petrochemical products with bigger markets. For our investments in China, we will adjust the production lines and make reasonable improvement of plants that have started mass production according to local needs in order to enhance competitiveness. On the other hand, we will continue to expand the capacity of the PCB and electronic material production of our Kunshan Plant to fulfill the augmenting local demand and securing our competitive strength by reducing cost and shortening the lead-time. 

To ensure the further growth of the company, we will continually expand the capacity of our petrochemical, plastic, fiber and electronic material plants at home, in order to establish a complete global production system with our rich operation know-how and advantage of vertical integration and diversification. Together that our investments in Formosa Petrochemical Corporation, Mailiao Power Corporation, Nanya Technology Corporation, PFG Fiber Glass Corporation, and Nan Ya Printed Circuit Board Corporation and US subsidiaries will make greater contribution to our return from investments, we firmly believe that we are capable of surmounting any difficulty and maintaining steady growth in difficult time.

After the No.6 Naphtha Cracking petrochemical plants started operations, the sales volume of petrochemical and plastic products since 2000 has exceeded that of the fiber and textile products, marking the FPG's success in transformation.

Copyright © 2017 Emerdax Corporation Inc. All Rights Reserved