I agree, clearly ASM have been way too optimistic about how easy it would be to break in to the Korean market. Experience shows Koreans will always buy Korean first in Korea. Japan might be easier to sell, but they are much more demanding on quality, with a longer qualification process. If you want to crack Japan then Taiwan may be the pathway.
I would call the first 3T a pilot order that will be put into production and then monitored for performance and quality, before the first real order is released. As usual with ASM, we have no visibility into this process, but unless the pilot order product failed, then it should be approved for mass production some time now. At that point some % of the requirement will be shared to ASM based upon price, with more % given for lower price. Additional steps in qualification could occur if NS World is not the end user, say they produce a magnetic component, then that component needs re-approval by the end user due to the changed raw material supplier (this is common).
I think it will help to consider ASM business to be an approved/qualified vendor situation rather than commodity offtake situation. I do wish that ASM would make that clearer.
ASM Price at posting:
$1.23 Sentiment: Hold Disclosure: Held
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