Taiwan’s Aerospace Industrial Development Corporation surged by the 10% daily limit Wednesday after the military aircraft manufacturer laid out a bullish outlook amid rising threats from China.
(Bloomberg) — Taiwan’s Aerospace Industrial Development Corporation surged by the 10% daily limit Wednesday after the military aircraft manufacturer laid out a bullish outlook amid rising threats from China.
AIDC expects revenue and earnings per share to reach a record high this year due to demand from the defense industry and a rebound in global air transport market, said AIDC’s Chairman Hu Kai-hung in an interview Tuesday. The company’s sales have grown 43% over the first seven months of the year, compared to the same period a year earlier, to NT$22.7 billion ($711 million).
Its shares have surged 65% this year so far, outperforming the benchmark Taiex’s 17% gain. Taiwan faces increased pressure to fend off daily Chinese incursions across the median line of the Taiwan Strait, a tacit barrier that has separated the two rivals for decades. The government in Taipei will raise its total defense spending to a record high of NT$606.8 billion ($19 billion), accounting for about 2.5% of GDP, according to a statement from the Presidential Office on Monday.
The partly state-backed Taiwanese company is aiming to deepen ties with Lockheed Martin Corp. and other system suppliers over F-16 maintenance in an effort to strengthen the island’s defense capabilities.
The F-16 Maintenance and Support center in central Taiwan, set up in 2020 with the help from the two companies, has significantly reduced the repair time needed for Taiwan’s air force, with some jobs previously taking as long as years, he said. He declined to give details about how much time or cost the center has helped save over the years due to confidentiality.
“Deepening localization of maintenance is top priority of the industry and the country” in response to rising tension across the strait, Hu said. “This increases fighter jets’ availability, enhances technology and expands business for Taiwan’s industries.”
The F-16 maintenance center currently only serves Taiwan’s Air Force, but AIDC hopes it will one day handle orders from Lockheed Martin for fighter jets from elsewhere, Hu said. The move will further integrate Taiwanese suppliers into the supply chain of the US company with more technology transfer, Hu added.
AIDC has received over NT$50 billion of orders for commercial products in the first half of the year, including a 10-year contract of over NT$35 billion to provide engine components to GE Aerospace. It also expects to deliver 66 trainer jets for Taiwan’s military by 2026, including 17 jets for 2023.
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