Garmin Taiwan to double capacity with new $321 mil. plant as global wearables boom
By Gloria Cho
TAIPEI, NNA- A sharp spike in demand for cutting-edge GPS devices and wearables drove Q2 revenue up by a record 53 percent to $1.33 billion from a year ago for multinational tech company Garmin Ltd.
Noting the robust double-digit growths in all segments, from aviation, marine and automotive to outdoor and fitness, and their huge potential ahead, the American company is planning to double overall capacity by setting up its fourth plant in southern Taiwan’s Tainan.
Costing $321 million, the plant near Tree Valley Park is expected to generate an annual production value of over NT$50 billion ($178.5 million) after its launch around October.
Meanwhile, its existing three facilities in northern Taiwan’s Xizhi, Jhongli and LinKou are already operating at almost full capacity and accounting for about 95 percent of its global output.
The new plant, which will help alleviate capacity constraints, will roll out products in all categories. However, it will focus on wearable products in the beginning, a Garmin Taiwan official told NNA.
Cliff Pemble, president and CEO of Garmin, told an earnings conference on July 18 that the plant would be part of its multi-year initiative to improve capacity and "prepare for opportunities that lie ahead".
In a press statement on the sterling Q2 performance, Pemble said, “Strong demand for active lifestyle products continued, and we experienced solid recovery within our aviation and auto segments resulting in record revenue and profits in the second quarter."
Revenue from navigational devices for the auto segment surged by 74 percent, followed by marine which upped by 66 percent; and outdoor expanding by 57 percent.
The aviation segment soared by 43 percent, while the popularity of fitness products during the pandemic grew the segment by 40 percent.
Garmin was especially pleased that its aviation technology Garmin Autoland won the 2020 Robert J. Collie Trophy for the world’s first certified autonomous system designed to activate an aircraft during an emergency, flying and landing safely without human intervention.
The company expects its full-year revenue to rise 17 percent to hit approximately $4.9 billion this year, with continual double-digit growth in all segments.
Co-founded in 1989 by Taiwanese Min Kao and Gary Burrell, the US-based company has extended its product portfolio from professional navigational devices in its early years to include innovative wearable and fitness gadgets such as smartwatch with navigational and fitness features to cater to growing trends.
Pandemic lockdowns and restricted outdoor activities have led to the fast adoption of health and fitness wearables worldwide since last year.
The demand for wearable devices remained strong in Q1 of 2021 even as volumes retreated from record levels of the fourth quarter of 2020.
According to data from the International Data Corporation (IDC), a total of 104.6 million units were shipped worldwide in Q1, up 34.4 percent from a year ago. It is also the first time that first quarter shipments topped 100 million units.
While market leaders like Apple (28.8 percent) and Samsung (11.3 percent) maintained double-digit market shares during the quarter, most of the growth came from smaller companies, said IDC in its report in May. China’s Xiaomi came in third with a 9.7 percent market share.
"Larger companies have certainly drawn attention to the worldwide wearables market, yet it is the smaller companies fueling growth," said Ramon T. Llamas, IDC research director for wearables.
"Rather than compete head-to-head with products similar to the market leaders, these smaller companies have instead focused on specific markets and thrived with different solutions," he added.
For instance, BoAt, which is placed fifth on IDC list, succeeded with a triple-digit growth by targeting only the Indian market.
Another shining example is Oura, whose fitness-tracking ring caught the attention of major sports teams and consumers. These two companies and many others contributed to the 'others' category, which posted 55.5 percent year-on-year growth.
Not only is the market being fueled by smaller brands, newer form factors have also started to gain some traction," said Jitesh Ubrani, IDC research manager for mobile device trackers.
He said, "Wearable patches, rings, and even audio glasses are starting to differentiate themselves from the typical watches, bands, and headphones by offering tech that is hidden yet functional. Audio glasses from the likes of Bose, Amazon, Razer, and others are also going a step further by allowing consumers to be more comfortable with being always connected and are working towards consumer acceptance of AR glasses further down the line."
Although it is not among the top five players overall, Garmin was the world’s second largest smartwatch producer in terms of revenue in the first half of 2020.
It achieved a 9.4 percent market share with its rugged Forerunner and Fenix outdoor watches, trailing behind Apple which was way ahead at 51.4 percent, a Counterpoint report showed.