Fri, May 30, 2014 - Page 13 News List

TPK admits its Chinese factory was a mistake

OOPS:Misplaced optimism from Microsoft led to the error, the touchpanel firm said, while shareholders backed a NT$5 dividend and a share sale plan

By Lisa Wang  /  Staff reporter

Touchpanel maker TPK Holding Co Ltd (宸鴻) yesterday said it was a mistake to invest NT$14.17 billion (US$47 million) in building a new plant in China last year to make touchpanels for notebook computers and all-in-one PCs, as demand has fizzled.

TPK, which originally focused on making touchpanels for mobile phones, said it made the investment at the request of Microsoft Corp and its clients, which anticipated that the release of Microsoft’s Windows 8 operating system would boost replacement demand for PCs with touchpanels. However, those hopes have been dashed, TPK said.

TPK began the 5.5-generation factory in Pingtan, in China’s Fujian Province, last year in an effort to diversify its portfolio after its biggest client, Apple Inc, turned to LG Display Co, Japan Display and Sharp Corp its iPhone touchpanels.

“The investment in capacity expansion in Pingtan was an error,” TPK chairman Michael Chiang (江朝瑞) told shareholders during yesterday’s annual shareholders’ meeting. “With the rising penetration of touch-enabled notebooks, we believe demand will heat up beginning in the fourth quarter.”

The penetration of notebooks with touch features is expected to increase from 11 percent last year to 15.6 percent this year, TPK said last month, citing a forecast by market researcher NPD DisplaySearch.

As demand for touch-enabled PCs fell short of forecasts and expectations, TPK said the new factory would produce a wider range of touchpanels from 7-inch tablet screens to 32-inch panels for PCs, using its one-glass-solution technology.

The factory is scheduled to ramp up production next quarter.

Chiang told shareholders that the company’s operation would improve significantly in the third and fourth quarters due to seasonal demand.

TPK swung into a net profit of NT$129 million in the first quarter after posting its first quarterly loss in the firm’s history of NT$1.61 billion in the fourth quarter last year, the company said.

“The first half is usually a slow period for the touchpanel industry. We believe this will also be the norm this year. Revenue will trend up in the third quarter and fourth quarter as usual,” Chiang said.

TPK yesterday declined to comment on the speculation that it has received new orders from Apple to supply touchpanels for the US electronics giant’s new iPhone 6 and wearable device, the iWatch.

Chiang said the company started supplying touchpanels for use in wearable devices to two clients in the first half of this year and that six more are to adopt TPK’s touchpanels for their wearable devices in the second half.

TPK shareholders approved a cash dividend of NT$5 per common share based on last year’s net profit of NT$7.19 billion, or earnings per share of NT$21.9. That represented a 2.11 percent dividend yield based on the stock’s closing price of NT$237 yesterday. Shareholders also backed a plan to sell up to 38 million new common shares.

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