Largan Precision Co (大立光), the world’s largest handset camera lens supplier, yesterday reported that third-quarter net profit grew to NT$2.32 billion (US$79.1 million), its second-highest on record, driven by increased shipments of higher-resolution camera modules for smartphones.
The figure represents growth of 14 percent from NT$2.03 billion in the previous quarter and 100 percent from NT$1.16 billion a year ago.
Earnings per share last quarter reached NT$17.3, according to the company’s financial report.
“The smartphone market is undergoing a ‘pixel migration,’ and we have observed that most smartphone vendors are ordering camera modules with higher pixel counts,” Largan CEO Adam Lin (林恩平) said in a conference call.
Lin said sales last month were likely to exceed September’s NT$2.65 billion, and this growth momentum was likely to continue through this month on robust smartphone demand.
“Clearly, camera modules that can take pictures of at least 8 megapixels will become a necessity for most new smartphone models next year,” Lin said.
The pixel count helps determine the quality of pictures produced by devices, but there are still smartphone vendors that use lower-pixel camera modules that can take high-quality pictures because of wide apertures, he said.
Currently, Largan supplies camera modules to high-end smartphone vendors, including Samsung Electronics Co , Apple Inc, Sony Corp, Nokia Ojy, Motorola Mobility Holdings Inc and BlackBerry Ltd.
The Greater Taichung-based company also supplies camera modules to entry-level and mid-end smartphone vendors such as China’s ZTE (中興通訊), Huawei Technologies (華為) and Xiaomi (小米).
Last quarter, shipments of greater-than-13-megapixel camera modules accounted for 10 percent to 20 percent of Largan’s total shipments, followed by 8-megapixel modules with a 30 percent to 40 percent share, and 5-megapixel modules with a 20 percent to 30 percent share, the company said.
In total, camera modules designed for smartphones accounted for between 80 percent and 85 percent of Largan’s third-quarter sales, while those for tablets, laptops and desktops accounted for the remaining 10 percent to 15 percent, it added.
Due to increased use of self-developed voice coil motors (VCM) with a lower yield rate, third-quarter gross margin fell to 47.11 percent from 50.45 percent a quarter ago, Largan said.
The company expects sales for this quarter to continue growing on more orders for new products, but gross margin may suffer from foreign exchange volatility and lower-margin VCMs, he added.
“It is relatively more difficult to improve production yields than to find land to build a new factory,” Lin said, when asked to comment on Largan’s latest capacity expansion plan.
The company is still waiting for permission from the Greater Taichung Government to establish a plant in a local industrial zone.
“We hope the government can help provide a solution for Largan to finish its new investment as soon as possible, though the issue is not likely to affect Largan’s business in the short term,” Lin said.
Regarding recent litigation against domestic rivals Ability Optoelectronic Technology Inc (先進光電) and Genius Electronic Optical Co (玉晶光), Lin said Largan’s stance is to protect its patents.
“Largan is aggressive in the patent war where it is involved and will take necessary action to protect its benefits,” he said.