Donald Trump’s ongoing trade war with China has impacted demand for sensors produced by a Fife firm.
China is one of the key markets for semiconductor specialists Semefab in Glenrothes.
The company produces sensors for the security, automotive, medical and industrial sectors.
Managing director Allan James said many Chinese firms were reducing their stocks as they feared the impact of increased tariffs.
“Trump’s trade war, his America first policy, has had serious repercussions to the Chinese supply chain who are fearful of tariff implications,” he said.
“Stocks have been taken down to a lower level and unfortunately that’s rippled through to us.”
Mr James, who founded Semefab in 1986, said the trade war meant the firm failed to meet its ambitious growth targets last year.
The Eastfield Industrial Estate increased its turnover by almost £1 million to £12.2m for the year ending October 31 2018.
However, pre-tax profits reduced from £1.2m in 2017 to £510,000 last year.
“We anticipated more growth for last year and actually we staffed up for a higher growth rate,” said Mr James.
“Unfortunately we saw a decline in our light sensor business in China.
“Whilst there was growth, we underperformed relative to the higher target.
“We finished up carrying additional costs that were not used efficiently.
“Our headcount went up from 103 to 118 where a happy medium would have been at the 110 level.”
Mr James said the company was well positioned for growth as global demand for sensors increased.
“We’ve got substantial spare capacity in the plant with the three wafer fabs we’re operating and we are working hard to fill that capacity,” he said.
“Because we have relatively high fixed costs in the system, we know that by increasing the volume through the plant we can return to good levels of profitability in the future.
“With increasing numbers of electric vehicles, IoT devices, concern for the environment which increases demand for air quality sensors, more robotics… everything is pushing in the direction of needing more and more sensors.”
The vast majority of the firm’s sales are overseas, with just £1.5m of the £12.2m turnover to UK customers.