Touchpanel controller supplier FocalTech Systems Co Ltd (敦泰科技) yesterday reported a 56 percent annual decline in net profit for last quarter due to weak demand for high-end smartphones in China and shipment delays.
Clients, including China’s biggest LCD panel maker BOE Technology Group (京東方), have rescheduled their shipments, as they had to redesign panels to cater to growing demand for displays with an 18:9 aspect ratio used in premium models, FocalTech said.
Many mobile phone vendors have shown a strong interest in adopting displays with an 18:9 aspect ratio, which provides a larger display area on a mobile device than 16:9 aspect ratio displays, the firm said.
The trend should become more evident, as Apple Inc is reportedly planning to adopt the 18:9 aspect ratio for its next iPhone model and a number of smartphone makers are expected to follow suit, the company added.
“We are optimistic about the third quarter, as we are seeing displays with the new design start to trickle out,” FocalTech chairman Genda Hu (胡正大) told an investors’ conference. “The third quarter will be better than the second quarter.”
“We also believe that new smartphones equipped with 18:9 aspect ratio displays will stimulate a new wave of replacement demand,” he added.
FocalTech last quarter increased inventory by 15 percent in a bid to cope with a quick pickup in demand during the peak season this quarter, the firm said.
FocalTech’s new integrated driver and controller (IDC) chip is more suitable for 18:9 aspect ratio displays, which are slim and lack a bezel, it added.
The company expects shipments of its IDC chip to jump 50 percent this quarter from last quarter’s 10 million units, riding on the 18:9 aspect ratio display trend.
China’s Oppo Mobile Telecommunications Corp (歐珀移動) and Vivo Electronics Corp (維沃移動通信) also plan to release smartphones with 18:9 aspect ratio displays in the second half of this year, market researcher IHS Markit Ltd said.
Last quarter, FocalTech’s net profit plunged to NT$31 million (US$1.02 million) from NT$71 million in the same period last year.
Earnings per share dropped to NT$0.12, compared with NT$0.24 a year earlier.
The company reported a loss of NT$8 million in the first quarter.
Gross margin last quarter rose to 20.5 percent, compared with 19.6 percent a year earlier, as the firm began shipments of higher-priced IDC chips this year.
It had a gross margin of 23 percent in the first quarter.
In the first half, net profit totaled NT$23 million, an improvement from a loss of NT$28 million in the same period last year.
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