About
- Media Highlights
- 09/15/2021
Be the Most Reliable Partner That Leads the Global Industry – An Interview with USI’s Chairman Jeffrey Chen
(2021-09-15) Listed on Shanghai Stock Exchange in 2012, USI (SH. 601231) is a world-leading electronic design and manufacturing service provider that leads the industry in the miniaturized module, system-in-package (SiP) and wearable electronic product manufacturing.
As a core subsidiary of ASE Technology Holding Co., Ltd., USI adheres to the strategic goal of “modularization, diversification and globalization”. Since its establishment over four decades ago, USI has offered professional services in development and design, material procurement, manufacturing, logistics and maintenance of electronic products (covering electronic components, parts and systems) in the areas of communication, computer and storage, consumer electronics, industrial, medical and automotive electronics. Currently, USI has 27 manufacturing sites across four continents, Asia, Europe, North America, and Africa.
From 2011 to 2020, the company's total assets, net assets, operating revenue and net profit grew at a compound annual growth rate (CAGR) of 22%, 20%, 16% and 16% respectively, achieving sustained, rapid and healthy development. In particular, as COVID-19 hit the global market in 2020, USI, with its customers all over the world, bucked the downward trend and achieved revenue of RMB 47.70 billion in 2020, up 28.2% year-on-year (YoY). In the first half of 2021, USI realized operating revenue of RMB 22.27 billion, up 30.89% YoY.
According to Manufacturing Market Insider (MMI), USI ranked 12th in the global EMS & ODM industry in 2020 with a high operating net profit ratio and leading competitiveness among industry peers.
How can USI gain growth momentum against the downward trend in the context of the pandemic?
Focus on SiP Business to Drive Explosive Growth
As an important participant in the global electronic industry, USI has an annual revenue of RMB 50 billion. What is the company's primary business? “What we do at USI is producing modules, not simple assembly. Our core technology is using SiP technology to integrate multiple functions onto a tiny board.” Jeffrey Chen, Chairman of USI, cited an example, “feature-packed smartwatches, True Wireless Stereo (TWS) Bluetooth headsets and so on, all of these products adopt SiP technology.”
USI is the leader of SiP technology. With 5G network, automotive electronics and industrial automation on the rise, all kinds of consumer electronic products will not only be smaller in size but feature more functions, using higher power and frequency. For these to be realized, modularization is the key.
In August 2021, USI achieved month-on-month revenue growth of 14.97% and YoY growth of 12.08%. Regarding the company’s impressive performance, Jeffrey Chen said, “USI's growth cycle is consistent with that of the electronics industry. Traditionally, the peak season for electronic products is around Thanksgiving and Christmas in western countries, so that the third quarter may see explosive growth. As China’s consumer market expands, the peak season is expected to extend from Christmas to Chinese New Year in January or February, and the fourth quarter may become part of the peak season as well. More importantly, we've grown faster than last year.” According to the company's public announcement, the accumulated revenue from January to August 2021 rose by 27.17% YoY.
Since it was officially put into commercial use in China in 2019, 5G has gradually matured and become a new growth engine. According to the Institute of Information and Communications Technology, 5G technology generated RMB 484 billion of direct economic output in 2020. It is estimated that by 2030, 5G will produce a direct economic output of RMB 6.3 trillion and indirect economic output of RMB 10.6 trillion. In the future, 5G technology will be continuously deployed in various vertical industries and unleash the potential of the emerging market.
The arrival of the 5G era has greatly enriched the capacity, functionality, and flexibility of smart wearable devices, which are empowered to play a more significant role in medical treatment, agriculture, manufacturing, and many other areas. According to Gartner, the global wearables market will reach USD 55.1 billion in 2021, growing at a CAGR of 12.1% from 2018 to 2021. Specifically, the size of China’s wearables market will reach RMB 54 billion in 2021, increasing at a CAGR of 19.3% from 2018 to 2021. China is, as the data shows, one of the fastest-growing consumer electronics markets in the world.
In 2020, the pandemic disrupted the balance between supply and demand. Due to remote work and homeschooling, the demand for smart electronic products such as computers, game consoles and mobile phones surged. As the industry gained unprecedented popularity, downstream companies actively increased inventory. “While the pandemic brought robust demand for electronic devices, the demand for 5G has not fully unfolded yet, and the industry will further grow in the next two to three years.” Jeffrey Chen showed optimism about the industry growth in the short and medium-term.
In 2020, communication electronics contributed RMB 20.28 billion to USI's total revenue, up 44.76% YoY. The innovation of downstream brands in smartphones and wearable products has enormously increased purchase orders for SiP modules. According to market surveys, Apple’s smartphone sales volume reached 201 million units in 2020, accounting for 15% of the global market, up 3% YoY. Shipments of wearable products are estimated to rise at a CAGR of 10% from 2019 to 2024. Particularly, smartwatches grew at a CAGR of 11%, and wireless headsets grew at a CAGR of 13%. USI’s increasing wearable device shipments and market share drove revenue from consumer electronics up by 29% YoY.
Improve R&D in SiP Technology, a Promising Area with Clear Application Scenarios
“It's true that the market situation matters, but more importantly, USI has built a solid foundation for SiP technology.” Jeffrey Chen believes that in a market that is conducive to the industry's overall development, it is still the technical advantages that make a company stand out from its industry peers.
Back in 2012, when USI was just listed on Shanghai Stock Exchange, its miniaturized module business accounted for only 27% of its revenue, a figure that is now over 60%. Now, USI has four factories mainly producing SiP products, including Zhangjiang Factory, Jinqiao Factory, Shengxia Factory, and Vietnam Factory. The forward-looking strategy has enabled USI to lead the industry in SiP modules with a cutting edge over its competitors in design and manufacturing capabilities. In comparison, USI has a broader range of products and more in-depth technical expertise. Its continuous growth is not simply fueled by market trends but an outcome of dedicated and sustained efforts in the past decade.
According to data from Wind, USI has constantly strengthened R&D, investing RMB 1.3 billion, 1.4 billion and 1.6 billion in R&D from 2018 to 2020, respectively. The company's R&D personnel have been on the increase as well year by year, the number of technical personnel being 3,411, 3,596 and 3,676 in the same period, accounting for 18.37%, 19.28% and 19.82% of the total employees.
At present, USI has established a long-term, stable partnership with many world-leading electronic product brand customers, mainly providing them with WiFi modules, UWB modules, smart wearable product modules, and fingerprint sensor modules. Meanwhile, USI is also exploring the application of miniaturization and developing modularized products such as System-on-Module (SOM) in wireless communication, computer, wearables, solid-state storage, industrial electronics, and automotive electronics.
In August 2021, USI launched a dual-core Bluetooth 5.0 Antenna-on-Package (AoP) module for compact IoT devices using its unique heterogeneous integration capability and miniaturization technology. In April 2021, USI launched the SOM 72255G module to seize the IoT device market, which can be applied to harsh industrial environments such as warehousing, logistics, transportation, and medical treatment. In September 2020, USI cooperated with the design company to develop a miniaturized audio module for smartphones, which greatly improves smartphones' audio performance and users' acoustic experience. In June 2020, USI adopted a double-sided conformal shielding process, one of its unique miniaturization techniques, and cooperated with a chip vendor to launch the SiP wireless chip module together to explore the WiFi 6E market.
In addition, USI works closely with the world's top brand companies and keeps up with the mainstream development trend of the electronic product market and information technology. Therefore, facing the rapidly changing market demand, USI always responds promptly by timely carrying out forward-looking deployment and developing new products, and plays a vital role as an industrial leader and incubator.
To this end, USI has established the Miniaturization Competence Center (MCC) and Corporate Venture Capital (CVC) project. On the one hand, the company expects to build an open R&D platform to empower high-quality emerging companies in the industrial chain and jointly explore new opportunities in the 5G and IoT era. On the other hand, the company continually strengthens its competitiveness in its advantageous areas through endogenous and exogenous investment-driven growth, bringing more great products to the market, and striving to bring expected benefits for the company, customers, and consumers.
Jeffrey Chen said: “The purpose of establishing the MCC is to carry out more extensive and in-depth industrial cooperation, to empower the company's strong joint design and manufacturing (JDM) capability, and to reduce the cost of SiP adoption through this platform and increase brand customers’ willingness to use SiP.”
The company focuses on integrating upstream and downstream of the industrial chain in targeted products and industries, such as essential parts and critical materials. It carries out strategic investment through CVC to form business partnerships up and down the industrial chain, organically combining business operation and capital management. By investing supporting funds and resources, USI will incubate business sectors and potential partners to serve its medium-and long-term development strategy, establish a closed-loop industrial ecosystem, and continuously enhance its corporate value.
Rise to Challenges in the New Era and Adopt Competitive Differentiation Tactic
The rapid development of AI, IoT and big data has brought new opportunities for the SiP industry and boosted the industrial demand for SiP. “When I joined USI three years ago, I set the goal of turning USI into a market-oriented and customer-oriented global electronics manufacturing service provider.” At the same time, political factors such as the escalating US-China technology and trade frictions have also brought new challenges to USI. In 2018, a year that witnessed the outbreak of the US-China trade war, Chairman Jeffrey Chen put forward the strategy of globalization and diversification in addition to modularization. “The trade friction has strengthened our goal of globalization.”
To follow the evolving technologies and the changing market structure, USI has selected the strategy of differentiated competition: in the field of EMS, the company has developed a global landscape, expanded its advantages in the European and American markets, and formed a global manufacturing system.
After integrating resources, USI has 27 manufacturing and service sites in 10 countries and regions in the world with more than 190 SMT production lines across Asia, North America, Europe and North Africa. Local professional teams can provide complete solutions and serve well-known brand customers across the world. The global landscape enables USI to have production bases in major low-cost manufacturing regions worldwide, further optimizing the customer structure and integrating the global supply chain to enter new end markets.
Based on high-quality products and high-standard internal processes, USI has more advantages on the international market and has established a long-term and stable cooperative relationship with major international customers. To conform to the development trend of “global demand and localized service” and fully meet the needs of European and American customers, USI has a different development strategy from industry peers. Since 2018, USI has accelerated its global expansion by expanding overseas production bases and initiating strategic investments.
In 2018, USI invested in Phi Fund, an automotive electronics fund. In 2019, the company expanded its production bases in Mexico and Poland to serve local customers. In 2020, the company acquired Asteelflash, the second-largest EMS provider in Europe, to offer European automobile customers services locally and further explore the European market. In the future, Asteelflash will jointly accelerate its development in automobile electronics. In 2021, USI is expected to officially put electric vehicle powertrain and heat dissipation system into mass production. By 2025, the company's automotive electronics business is expected to generate more than USD 1 billion revenue. In particular, powertrain-related businesses are expected to contribute more than USD 300 million revenue over the next two to three years. Focusing on the global market and integrating global resources, USI aims to become a multinational company with global businesses.
Jeffrey Chen has a deep understanding of the company’s globalization strategy. “If a company wants to globalize, it must make joint efforts from the perspective of commercialization, operation and support.” In terms of commercial, the products from Asian factories have already been sold to consumers around the world, while there is still room for improvement in operation and support.
USI will continue to deepen its efforts in personnel and procurement in the future. “First of all, our logistics personnel, including accounting, legal and manufacturing personnel, will face the language barriers when they are sent overseas in the future, so we will consider hiring more international talents. For example, the chief accountant and the chief legal officer we recently recruited have long-time overseas experience,” Chen said. “Second, the procurement system will be another point that needs to be upgraded. At present, most of our manufacturing sites are in China, and our procurement is still centered in Asia. Once we enter European and American markets, it takes a lot of time and energy to adapt to their IT and personnel systems.”
“However, we have sent teams to France, and the integration with Asteelflash is quite smooth and well within my expectation.” Jeffrey Chen is quite satisfied with the globalization process of the company. Regarding the future M&A plan, Jeffrey Chen said, “USI will not make acquisitions only to expand and increase production, but to strengthen our soft power such as design and service capabilities, or to enter new fields.”
Achieve Sustainable and Healthy Growth and Be the Most Reliable Manufacturer in the Industry
From business operation to corporate culture development, USI is committed to becoming the most reliable electronic design and manufacturing service provider globally, which is also USI's vision.
Since its listing in 2012, USI’s annual revenue and net profit have grown at a CAGR of over 10%, and net assets have increased at a CAGR of 15% with the industry-leading quality of assets. In addition to steady operation, the company also takes creating value and mutual benefits for shareholders as its mission. Since its listing, the company has achieved a net profit of RMB 8.9 billion and a cumulative cash dividend of over RMB 2.2 billion in nine consecutive years, the annual payout ratio being over 30%, to protect and enhance the interests of investors effectively.
USI has been fulfilling the requirements of regulators with high standards and maintained A-level ratings in the information disclosure evaluation by Shanghai Stock Exchange for four consecutive years. Besides financial information disclosure, USI has publicly released the Corporate Social Responsibility Report (now renamed as “Sustainability Report”) every year since 2013 to improve the quality of non-financial information disclosure and enhance the company's sustainable value. In 2020, the company's ESG rating in MSCI Emerging Markets Index was upgraded to BB. USI won the “Sustainable Development Award” and “Corporate Social Responsibility Award” in China ESG Golden Awards 2020 held by Sina Finance, and the Sustainability Award at the 2020 SGS CSR Awards, demonstrating the company's continuous efforts in sustainable development.
Speaking of ESG, Chairman Jeffrey Chen said, “firstly, a company should clearly understand the policies in their operating countries and how their industries can contribute to environmental protection, and then make good use of resources within their capabilities. Second, the explicit content related to ESG should be fully disclosed. USI has publicly released its ESG report for nine consecutive years. Lastly, discussions on ESG issues should be conducted at the board level.” As early as 2000, USI set up the Environment, Health and Safety (EHS) Department, which gradually evolved into a Sustainable Development Committee that works between various departments and supports the company's fulfilment of its social responsibility.
The company actively promotes a smart and green manufacturing system and builds five-star factories. The ultimate goal is to achieve 100% automation and lights-out manufacturing in over 80% of its production lines. In terms of products, 86% of USI's total revenue are from products that are easy to disassemble, recyclable, and have low energy consumption.
In response to global climate change, USI actively promotes the use of renewable energy. For instance, the factories in the Chinese mainland have turned 100% of power consumption into green energy. In the Nankang plant in Taiwan, a solar power generation system has been built on the top of the building. By the end of 2020, approximately 685,000 kilowatt-hours of green electricity had been generated. This is how USI performs its corporate social responsibility. It closely combines environmental management with its manufacturing process, integrating ESG into the company's daily operation and developing a green manufacturing system.
In terms of employee benefits, USI has always attached great importance to retaining, cultivating and attracting talents. The company has offered stock incentive plans and annual bonuses for talents and implemented employee stock ownership plans for different employees in 2019, 2020 and 2021 respectively.
In 2020, USI sponsored RMB 5.97 million in 69 social activities and 44 external organizations. As a corporate citizen, USI believes that social engagement is not only financial support but also contribute to the overall development of society by achieving sustainable development and giving back to society. USI has built a platform for cross-strait interaction between young people in the Chinese mainland and Taiwan by supporting the “Cross-Strait Student Baseball League” and "Cross-Strait Youth Go Game" to create opportunities for youth to strengthen exchanges, enhance mutual trust and bond with each other in the activities.
From now on, USI will keep promoting R&D and innovation of SiP technology in the development process of miniaturization, provide total solutions at lower costs, expand to downstream electronic fields, open up the global electronic manufacturing service market with SiP technology as the core, and realize the company's vision of “being a global industry leader”.
As a core subsidiary of ASE Technology Holding Co., Ltd., USI adheres to the strategic goal of “modularization, diversification and globalization”. Since its establishment over four decades ago, USI has offered professional services in development and design, material procurement, manufacturing, logistics and maintenance of electronic products (covering electronic components, parts and systems) in the areas of communication, computer and storage, consumer electronics, industrial, medical and automotive electronics. Currently, USI has 27 manufacturing sites across four continents, Asia, Europe, North America, and Africa.
From 2011 to 2020, the company's total assets, net assets, operating revenue and net profit grew at a compound annual growth rate (CAGR) of 22%, 20%, 16% and 16% respectively, achieving sustained, rapid and healthy development. In particular, as COVID-19 hit the global market in 2020, USI, with its customers all over the world, bucked the downward trend and achieved revenue of RMB 47.70 billion in 2020, up 28.2% year-on-year (YoY). In the first half of 2021, USI realized operating revenue of RMB 22.27 billion, up 30.89% YoY.
According to Manufacturing Market Insider (MMI), USI ranked 12th in the global EMS & ODM industry in 2020 with a high operating net profit ratio and leading competitiveness among industry peers.
How can USI gain growth momentum against the downward trend in the context of the pandemic?
Focus on SiP Business to Drive Explosive Growth
As an important participant in the global electronic industry, USI has an annual revenue of RMB 50 billion. What is the company's primary business? “What we do at USI is producing modules, not simple assembly. Our core technology is using SiP technology to integrate multiple functions onto a tiny board.” Jeffrey Chen, Chairman of USI, cited an example, “feature-packed smartwatches, True Wireless Stereo (TWS) Bluetooth headsets and so on, all of these products adopt SiP technology.”
USI is the leader of SiP technology. With 5G network, automotive electronics and industrial automation on the rise, all kinds of consumer electronic products will not only be smaller in size but feature more functions, using higher power and frequency. For these to be realized, modularization is the key.
In August 2021, USI achieved month-on-month revenue growth of 14.97% and YoY growth of 12.08%. Regarding the company’s impressive performance, Jeffrey Chen said, “USI's growth cycle is consistent with that of the electronics industry. Traditionally, the peak season for electronic products is around Thanksgiving and Christmas in western countries, so that the third quarter may see explosive growth. As China’s consumer market expands, the peak season is expected to extend from Christmas to Chinese New Year in January or February, and the fourth quarter may become part of the peak season as well. More importantly, we've grown faster than last year.” According to the company's public announcement, the accumulated revenue from January to August 2021 rose by 27.17% YoY.
Since it was officially put into commercial use in China in 2019, 5G has gradually matured and become a new growth engine. According to the Institute of Information and Communications Technology, 5G technology generated RMB 484 billion of direct economic output in 2020. It is estimated that by 2030, 5G will produce a direct economic output of RMB 6.3 trillion and indirect economic output of RMB 10.6 trillion. In the future, 5G technology will be continuously deployed in various vertical industries and unleash the potential of the emerging market.
The arrival of the 5G era has greatly enriched the capacity, functionality, and flexibility of smart wearable devices, which are empowered to play a more significant role in medical treatment, agriculture, manufacturing, and many other areas. According to Gartner, the global wearables market will reach USD 55.1 billion in 2021, growing at a CAGR of 12.1% from 2018 to 2021. Specifically, the size of China’s wearables market will reach RMB 54 billion in 2021, increasing at a CAGR of 19.3% from 2018 to 2021. China is, as the data shows, one of the fastest-growing consumer electronics markets in the world.
In 2020, the pandemic disrupted the balance between supply and demand. Due to remote work and homeschooling, the demand for smart electronic products such as computers, game consoles and mobile phones surged. As the industry gained unprecedented popularity, downstream companies actively increased inventory. “While the pandemic brought robust demand for electronic devices, the demand for 5G has not fully unfolded yet, and the industry will further grow in the next two to three years.” Jeffrey Chen showed optimism about the industry growth in the short and medium-term.
In 2020, communication electronics contributed RMB 20.28 billion to USI's total revenue, up 44.76% YoY. The innovation of downstream brands in smartphones and wearable products has enormously increased purchase orders for SiP modules. According to market surveys, Apple’s smartphone sales volume reached 201 million units in 2020, accounting for 15% of the global market, up 3% YoY. Shipments of wearable products are estimated to rise at a CAGR of 10% from 2019 to 2024. Particularly, smartwatches grew at a CAGR of 11%, and wireless headsets grew at a CAGR of 13%. USI’s increasing wearable device shipments and market share drove revenue from consumer electronics up by 29% YoY.
Improve R&D in SiP Technology, a Promising Area with Clear Application Scenarios
“It's true that the market situation matters, but more importantly, USI has built a solid foundation for SiP technology.” Jeffrey Chen believes that in a market that is conducive to the industry's overall development, it is still the technical advantages that make a company stand out from its industry peers.
Back in 2012, when USI was just listed on Shanghai Stock Exchange, its miniaturized module business accounted for only 27% of its revenue, a figure that is now over 60%. Now, USI has four factories mainly producing SiP products, including Zhangjiang Factory, Jinqiao Factory, Shengxia Factory, and Vietnam Factory. The forward-looking strategy has enabled USI to lead the industry in SiP modules with a cutting edge over its competitors in design and manufacturing capabilities. In comparison, USI has a broader range of products and more in-depth technical expertise. Its continuous growth is not simply fueled by market trends but an outcome of dedicated and sustained efforts in the past decade.
According to data from Wind, USI has constantly strengthened R&D, investing RMB 1.3 billion, 1.4 billion and 1.6 billion in R&D from 2018 to 2020, respectively. The company's R&D personnel have been on the increase as well year by year, the number of technical personnel being 3,411, 3,596 and 3,676 in the same period, accounting for 18.37%, 19.28% and 19.82% of the total employees.
At present, USI has established a long-term, stable partnership with many world-leading electronic product brand customers, mainly providing them with WiFi modules, UWB modules, smart wearable product modules, and fingerprint sensor modules. Meanwhile, USI is also exploring the application of miniaturization and developing modularized products such as System-on-Module (SOM) in wireless communication, computer, wearables, solid-state storage, industrial electronics, and automotive electronics.
In August 2021, USI launched a dual-core Bluetooth 5.0 Antenna-on-Package (AoP) module for compact IoT devices using its unique heterogeneous integration capability and miniaturization technology. In April 2021, USI launched the SOM 72255G module to seize the IoT device market, which can be applied to harsh industrial environments such as warehousing, logistics, transportation, and medical treatment. In September 2020, USI cooperated with the design company to develop a miniaturized audio module for smartphones, which greatly improves smartphones' audio performance and users' acoustic experience. In June 2020, USI adopted a double-sided conformal shielding process, one of its unique miniaturization techniques, and cooperated with a chip vendor to launch the SiP wireless chip module together to explore the WiFi 6E market.
In addition, USI works closely with the world's top brand companies and keeps up with the mainstream development trend of the electronic product market and information technology. Therefore, facing the rapidly changing market demand, USI always responds promptly by timely carrying out forward-looking deployment and developing new products, and plays a vital role as an industrial leader and incubator.
To this end, USI has established the Miniaturization Competence Center (MCC) and Corporate Venture Capital (CVC) project. On the one hand, the company expects to build an open R&D platform to empower high-quality emerging companies in the industrial chain and jointly explore new opportunities in the 5G and IoT era. On the other hand, the company continually strengthens its competitiveness in its advantageous areas through endogenous and exogenous investment-driven growth, bringing more great products to the market, and striving to bring expected benefits for the company, customers, and consumers.
Jeffrey Chen said: “The purpose of establishing the MCC is to carry out more extensive and in-depth industrial cooperation, to empower the company's strong joint design and manufacturing (JDM) capability, and to reduce the cost of SiP adoption through this platform and increase brand customers’ willingness to use SiP.”
The company focuses on integrating upstream and downstream of the industrial chain in targeted products and industries, such as essential parts and critical materials. It carries out strategic investment through CVC to form business partnerships up and down the industrial chain, organically combining business operation and capital management. By investing supporting funds and resources, USI will incubate business sectors and potential partners to serve its medium-and long-term development strategy, establish a closed-loop industrial ecosystem, and continuously enhance its corporate value.
Rise to Challenges in the New Era and Adopt Competitive Differentiation Tactic
The rapid development of AI, IoT and big data has brought new opportunities for the SiP industry and boosted the industrial demand for SiP. “When I joined USI three years ago, I set the goal of turning USI into a market-oriented and customer-oriented global electronics manufacturing service provider.” At the same time, political factors such as the escalating US-China technology and trade frictions have also brought new challenges to USI. In 2018, a year that witnessed the outbreak of the US-China trade war, Chairman Jeffrey Chen put forward the strategy of globalization and diversification in addition to modularization. “The trade friction has strengthened our goal of globalization.”
To follow the evolving technologies and the changing market structure, USI has selected the strategy of differentiated competition: in the field of EMS, the company has developed a global landscape, expanded its advantages in the European and American markets, and formed a global manufacturing system.
After integrating resources, USI has 27 manufacturing and service sites in 10 countries and regions in the world with more than 190 SMT production lines across Asia, North America, Europe and North Africa. Local professional teams can provide complete solutions and serve well-known brand customers across the world. The global landscape enables USI to have production bases in major low-cost manufacturing regions worldwide, further optimizing the customer structure and integrating the global supply chain to enter new end markets.
Based on high-quality products and high-standard internal processes, USI has more advantages on the international market and has established a long-term and stable cooperative relationship with major international customers. To conform to the development trend of “global demand and localized service” and fully meet the needs of European and American customers, USI has a different development strategy from industry peers. Since 2018, USI has accelerated its global expansion by expanding overseas production bases and initiating strategic investments.
In 2018, USI invested in Phi Fund, an automotive electronics fund. In 2019, the company expanded its production bases in Mexico and Poland to serve local customers. In 2020, the company acquired Asteelflash, the second-largest EMS provider in Europe, to offer European automobile customers services locally and further explore the European market. In the future, Asteelflash will jointly accelerate its development in automobile electronics. In 2021, USI is expected to officially put electric vehicle powertrain and heat dissipation system into mass production. By 2025, the company's automotive electronics business is expected to generate more than USD 1 billion revenue. In particular, powertrain-related businesses are expected to contribute more than USD 300 million revenue over the next two to three years. Focusing on the global market and integrating global resources, USI aims to become a multinational company with global businesses.
Jeffrey Chen has a deep understanding of the company’s globalization strategy. “If a company wants to globalize, it must make joint efforts from the perspective of commercialization, operation and support.” In terms of commercial, the products from Asian factories have already been sold to consumers around the world, while there is still room for improvement in operation and support.
USI will continue to deepen its efforts in personnel and procurement in the future. “First of all, our logistics personnel, including accounting, legal and manufacturing personnel, will face the language barriers when they are sent overseas in the future, so we will consider hiring more international talents. For example, the chief accountant and the chief legal officer we recently recruited have long-time overseas experience,” Chen said. “Second, the procurement system will be another point that needs to be upgraded. At present, most of our manufacturing sites are in China, and our procurement is still centered in Asia. Once we enter European and American markets, it takes a lot of time and energy to adapt to their IT and personnel systems.”
“However, we have sent teams to France, and the integration with Asteelflash is quite smooth and well within my expectation.” Jeffrey Chen is quite satisfied with the globalization process of the company. Regarding the future M&A plan, Jeffrey Chen said, “USI will not make acquisitions only to expand and increase production, but to strengthen our soft power such as design and service capabilities, or to enter new fields.”
Achieve Sustainable and Healthy Growth and Be the Most Reliable Manufacturer in the Industry
From business operation to corporate culture development, USI is committed to becoming the most reliable electronic design and manufacturing service provider globally, which is also USI's vision.
Since its listing in 2012, USI’s annual revenue and net profit have grown at a CAGR of over 10%, and net assets have increased at a CAGR of 15% with the industry-leading quality of assets. In addition to steady operation, the company also takes creating value and mutual benefits for shareholders as its mission. Since its listing, the company has achieved a net profit of RMB 8.9 billion and a cumulative cash dividend of over RMB 2.2 billion in nine consecutive years, the annual payout ratio being over 30%, to protect and enhance the interests of investors effectively.
USI has been fulfilling the requirements of regulators with high standards and maintained A-level ratings in the information disclosure evaluation by Shanghai Stock Exchange for four consecutive years. Besides financial information disclosure, USI has publicly released the Corporate Social Responsibility Report (now renamed as “Sustainability Report”) every year since 2013 to improve the quality of non-financial information disclosure and enhance the company's sustainable value. In 2020, the company's ESG rating in MSCI Emerging Markets Index was upgraded to BB. USI won the “Sustainable Development Award” and “Corporate Social Responsibility Award” in China ESG Golden Awards 2020 held by Sina Finance, and the Sustainability Award at the 2020 SGS CSR Awards, demonstrating the company's continuous efforts in sustainable development.
Speaking of ESG, Chairman Jeffrey Chen said, “firstly, a company should clearly understand the policies in their operating countries and how their industries can contribute to environmental protection, and then make good use of resources within their capabilities. Second, the explicit content related to ESG should be fully disclosed. USI has publicly released its ESG report for nine consecutive years. Lastly, discussions on ESG issues should be conducted at the board level.” As early as 2000, USI set up the Environment, Health and Safety (EHS) Department, which gradually evolved into a Sustainable Development Committee that works between various departments and supports the company's fulfilment of its social responsibility.
The company actively promotes a smart and green manufacturing system and builds five-star factories. The ultimate goal is to achieve 100% automation and lights-out manufacturing in over 80% of its production lines. In terms of products, 86% of USI's total revenue are from products that are easy to disassemble, recyclable, and have low energy consumption.
In response to global climate change, USI actively promotes the use of renewable energy. For instance, the factories in the Chinese mainland have turned 100% of power consumption into green energy. In the Nankang plant in Taiwan, a solar power generation system has been built on the top of the building. By the end of 2020, approximately 685,000 kilowatt-hours of green electricity had been generated. This is how USI performs its corporate social responsibility. It closely combines environmental management with its manufacturing process, integrating ESG into the company's daily operation and developing a green manufacturing system.
In terms of employee benefits, USI has always attached great importance to retaining, cultivating and attracting talents. The company has offered stock incentive plans and annual bonuses for talents and implemented employee stock ownership plans for different employees in 2019, 2020 and 2021 respectively.
In 2020, USI sponsored RMB 5.97 million in 69 social activities and 44 external organizations. As a corporate citizen, USI believes that social engagement is not only financial support but also contribute to the overall development of society by achieving sustainable development and giving back to society. USI has built a platform for cross-strait interaction between young people in the Chinese mainland and Taiwan by supporting the “Cross-Strait Student Baseball League” and "Cross-Strait Youth Go Game" to create opportunities for youth to strengthen exchanges, enhance mutual trust and bond with each other in the activities.
From now on, USI will keep promoting R&D and innovation of SiP technology in the development process of miniaturization, provide total solutions at lower costs, expand to downstream electronic fields, open up the global electronic manufacturing service market with SiP technology as the core, and realize the company's vision of “being a global industry leader”.
