Touchpanel controller supplier FocalTech Systems Co Ltd (敦泰科技) yesterday said that its net profit grew 3.3-fold last quarter, as adoption of higher-margin integrated driver and controller (IDC) chip for mobile display panels gained traction after two years of deployment.
Net profit surged to NT$134 million (US$4.4 million) last quarter, compared with NT$31 million in the second quarter. That also represented an expansion of 44 percent from NT$93 million in the same period last year.
Gross margin edged up to 20.6 percent last quarter from 20.5 percent in the prior quarter.
The growth in IDC chip shipments bolstered the company’s confidence that integrated chips are on track to become the next mainstream solution for mobile LCD panels and would play a key role in fueling FocalTech’s next-stage growth, company chairman Genda Hu (胡正大) said.
Sales of IDC chips should provide a cushion against seasonal weakness this quarter, Hu said.
“Fourth-quarter revenue is likely to drop slightly after hitting the peak in the third quarter [of the year], in line with the seasonal pattern that we have seen in the mobile phone industry over the past three years,” Hu said.
“As our IDC shipment is still growing, we believe we will see a milder [quarterly] decline than our peers,” he added.
Revenue last quarter jumped 26 percent to NT$3.27 billion from NT$2.6 billion in the previous quarter, thanks to growing seasonal demand across the board.
Conventional controller chips for flat panels remained the major revenue source for the chipmaker.
During the quarter ending Sept. 30, FocalTech shipped 19 million IDC chips, a spike of 58 percent from 12 million units in the second quarter, as the cost of IDC chips for in-cell touch modules nears the crossover point compared with that of out-cell touch modules.
As of last quarter, FocalTech had shipped 41 million IDC chips, still far behind the 100 million unit shipment target the company set at the beginning of the year.
“The rate of adoption of IDC chip fell short of our expectations,” Hu said. “We found that high cost was the determining factor behind the slower uptake of IDC chips.”
In addition, mobile phone vendors postponed new product launches by longer than three months to redesign their phones to feature mobile screens with an aspect ratio of 18:9 such as the latest iPhone series.
FocalTech’s IDC chip is used in Xiaomi Corp’s (小米) Xiaomi MIX2, Sharp Corp’s AQUOS S2, Huawei Technologies Co’s (華為) Maimang 6 and Vivo Electronics Corp’s (維沃移動通信) V7 phone, it said.
The company expects market competition to escalate next year, with three or four new rivals, primarily from China, expected to enter the field.
California-based Synaptics Inc is currently its sole competitor.
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