Compal Electronics Inc (仁寶電腦), the world's second-largest maker of notebook computers, yesterday posted a drop in its third-quarter profit as a result of losses from its reinvestments.
Net income for the third quarter shrank 2 percent to NT$2.3 billion (US$68.5 million), or NT$0.61 per share, from NT$2.3 billion, or NT$0.68 per share, during the same period a year ago.
"Losses at TPO Displays Corp were larger than we expected," Ray Chen (陳瑞聰), Compal's president and chief executive officer, said at an investor's conference yesterday.
TPO Displays, the world's second-largest maker of handset displays, was formed in June after Toppoly Optoelectronics Corp (統寶光電) bought Philips Mobile Display Systems, a unit of Royal Philips Electronics NV.
Compal owns 25.1 percent of TPO Displays and 17.5 percent of Philips Mobile Display Systems.
Gross margins in the third quarter were down below the 5 percent mark for the second consecutive quarter to 4.6 percent, compared to 6.1 percent in the corresponding period last year.
"It is inevitable to see declining margins [due to price competition in the notebook computer manufacturing industry]," Chen said.
As more than 90 percent of Compal's revenues come from notebook computers, its margins would continue to decline, but "at a slower pace" next year, he said.
The maker will continue to seek mergers and acquisitions to expand product portfolios to lift up its shrinking margins, he said.
Compal's sales for the third quarter gained 43 percent to NT$79.5 billion, from NT$55.7 billion a year earlier.
Looking forward, the company expects to see growth in shipments of notebook computers in the current quarter.
"Fourth-quarter demand is strong," Chen said.
It expects to ship 4.6 million portable computers this quarter, up from 3.9 million units in the previous three months.
However, because of component shortages, Chen said that whole-year shipments will hit only 14 million units, 1 million short of its earlier projection.
"These shortages affected us in fulfilling our clients' orders. We were unable to deliver over 100,000 units this month," he said.
Major notebook manufacturers such as Dell Inc, Apple Computer Inc, Toshiba Corp and Lenovo Group Ltd (聯想) have recently recalled malfunctioning batteries produced by Sony Corp, causing a shortage of notebook batteries, he said.
Compal is also trying to locate more supplies of dynamic random access memory (DRAM), liquid-crystal-display panels and central processing units, he said.
An analyst, who declined to be named, questioned the possibility of Compal beefing up its finances next year, as the company's reinvestments in Vibo Telecom Inc (威寶電信) and TPO Displays were still losing money.
"It seems a tough ask for Vibo to break even by the middle of 2008 as it intends," the analyst said.
Vibo -- the nation's only strictly third-generation telecom operator, in which Compal holds a 29 percent stake -- is expected to incur a loss of NT$6 billion this year.
Shares of Compal were up 1.6 percent to close at NT$29.35 yesterday on the Taiwan Stock Exchange.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts