Orise Technology Co (旭曜科技), which makes driver ICs for handset panels, yesterday said its growth momentum would weaken this quarter, as China plans to halve subsidies for high-end fourth-generation (4G) smartphones.
However, over the longer term, the company still expects a “good year,” given continued growth in Chinese and global mobile phone markets, president Liao Ming-cheng (廖明正) told an investors’ conference in Taipei.
“The market demand will soften only briefly because of [China’s] policy change,” Liao said.
SUBSIDY CUT
China’s National Development and Reform Commission plans to cut the subsidies for premium 4G phones to 5 billion yuan (US$799.31 million) from the 10 billion yuan it had budgeted originally.
“Overall demand will pick up in the second half of July and the rebound will carry into the rest of the year,” Liao said.
“We believe the [Chinese handset] market is still healthy,” he said.
Moreover, demand for entry-level phones in China is still on the rise, Liao said.
A spike in low-end phones has recently caused a shortage of driver ICs, he said.
Last quarter, Orise generated 45 percent of its revenue from China. The company made NT$2.61 billion in revenue, up 33 percent annually from NT$1.97 billion.
Nearly 90 percent of the company’s revenue last quarter were from driver ICs used in mobile phones.
The company is optimistic about next quarter and expects only a mild revenue decline, Liao said.
That compares with a 21 percent sequential decline in the third quarter of last year, when sales were affected by product transition, he said.
4G PICKING UP
Orise’s sales rose 5.45 percent month-on-month and 28.09 percent year-on-year to a record NT$1.2 billion last month, driven by 4G smartphone ramps in China as most of the new 4G models use larger panels with higher resolutions.
Deutsche Bank expects Orise’s second-quarter revenue to rise 27.2 percent sequentially to NT$3.32 billion, with a gross margin of 18 percent.
Orise counts Nokia Oyj, Sony Corp and Motorola Mobility among its major clients. The company is set to merge with touch-sensor supplier FocalTech Corp (敦泰科技) on Jan. 2 next year.
To reduce downside risks, Orise is diversifying its product lineup by offering driver ICs for wearable devices and cars, he said.
Orise shares rose 1.28 percent to close at NT$55.20 in Taipei trading yesterday.
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