Touchpanel supplier TPK Holding Co (宸鴻) yesterday reported a 42.1 percent sequential increase in sales last quarter, which was in line with analysts’ forecasts.
The company’s sales for this quarter are predicted to beat the seasonal downturn as demand for Apple Inc’s iPad Air is likely to extend into the Lunar New Year, analysts said.
TPK reported NT$41.88 billion (US$1.42 million) in consolidated sales during the October-to-December quarter, after sales for last month grew 7.7 percent month-on-month to NT$15.93 billion, the company said in a statement. On an annual basis, sales for last month and last quarter were down by 28.9 percent and 33.3 percent respectively.
Tammy Lai (賴敏敏) and Aaron Wu, analysts at Macquarie Capital Securities Ltd Taiwan, said in a client note that TPK is one of the major beneficiaries of recovering iPad Air shipments, as the Taiwanese firm enjoys a 60 to 70 percent order allocation of the slimmer-version tablet by Apple Inc.
“We expect a first-quarter sales decline of 20 percent quarter-on-quarter,” Lai and Wu said.
As for smartphones, orders from TPK’s customers, including Japan’s Sony Corp as well as China’s Meizu Technology Co (魅族) and Oppo Electronics Corp (歐珀), have been growing nicely to offset the decline of other brands, the two analysts added.
TPK last year posted a consolidated revenue of NT$159.07 billion, 8.4 percent lower than the NT$173.66 billion recorded in 2012, as the company faced rising competition from Chinese rivals in both the smartphone and tablet businesses, as well as lackluster growth in touchscreen notebooks and all-in-one computers.
This year, the company is relying on touch films using silver nanowire (SNW) technology through its alliance with Japan’s Nissha Printing Co to ward off competition from Chinese competitors in the smartphone business.
SNW technology is considered a cost-competitive replacement for the current indium-tin-oxide technology and the company plans to begin mass production of SNW films in April this year.
Lai and Wu said the risk for TPK remains, as SNW will mainly address China smartphones, while peers such as O-film Tech Co Ltd (歐菲光) have caught up with touch panels using metal-mesh technology and benefit from the local sourcing strategy of Chinese brands.
The Chinese-language Economic Daily News yesterday reported that O-film Tech and another Chinese touchpanel maker, Laibao Hi-Tech Co (萊寶), are planning to set up research centers in Taiwan this year to take advantage of local talent while aiming to gain more orders from clients.
Yuanta Securities Co (元大證券) analyst George Chang (張家麒) said the intensifying competition with their Chinese peers is unavoidable for TPK and Wintek Corp (勝華).
“Going forward, we need to observe the growth prospects of touchscreen notebook computers,” Chang said in a separate note. “A faster-than-expected rise in penetration of touchscreen notebooks will have a positive impact on both TPK and Wintek,” he added
TPK shares closed 5.18 percent lower at NT$174 yesterday and those of Wintek fell 1.93 percent to NT$10.15, both under performing the broader market’s 0.54 percent decline.