Wed, Nov 15, 2017 - Page 12 News List

Smartwatch segment to turn profit: Quanta

By Lauly Li  /  Staff reporter

Quanta Computer Inc (廣達), Apple Inc’s main assembler for MacBooks and the Apple Watch, yesterday said it expects its smartwatch segment to finally start turning a profit this quarter, ending three years of losses.

“Shipments of a large client’s new smartwatch are quite strong since the product began shipping last month,” Quanta vice chairman C.C. Leung (梁次震) told reporters after a company news conference at the company’s headquarters in New Taipei City’s Linkou District (林口).

The shipments outlook for the product next year is not bad either, Leung added.

Compared with previous generations, the client’s latest smartwatch can carry out a lot of functions without a smartphone nearby and the product has received a warm welcome on global markets, Leung said.

Quanta’s notebook computer segment, which contributed between 50 and 55 percent of Quanta’s total revenue of NT$276.18 billion (US$9.15 billion) last quarter, is forecast to maintain similar shipments as last quarter’s 11.5 million units, Leung said.

Order visibility for Quanta’s notebook shipments next year is not yet clear, but Leung said the global notebook industry would likely face a mild contraction next year.

As part of Quanta’s strategy to seek new growth catalysts, Quanta chairman Barry Lam (林百里) said the company has been investing in research and development on augmented reality (AR) glasses.

Quanta’s focus is to develop optical technologies to project images from a chip inside the AR glasses, Lam said.

Quanta is collaborating with international lens companies on the optical technologies and Leung is optimistic of seeing AR glasses in commercial markets by 2019 at the earliest.

Quanta’s net profit last quarter grew mildly by 1 percent year-on-year and 0.4 percent quarter-on-quarter to NT$3.99 billion.

Gross margin retreated by 1.04 percentage points year-on-year to 4.48 percent due to product portfolio changes, the company said.

Operating margin fell 0.91 percentage points year-on-year to 1.75 percent last quarter on rising research and development costs, it said.

Quanta’s research and development spending in the first three quarters of this year rose 12.19 percent year-on-year to NT$9.2 billion in the AR, virtual reality, cloud-computing, artificial intelligence and driverless cars sectors, Quanta chief financial officer Elton Yang (楊俊烈) said.

When asked to comment on the Fair Trade Commission’s decision to fine Qualcomm Inc, Lam said he does not understand why the commission would claim Qualcomm unfairly manipulated the chip market.

“Qualcomm is a very important partner of Taiwan’s original design manufacturers and smartphone vendors. The company’s technologies are important for local firms,” Lam said.

The fine would undermine the supply chain relationships between Qualcomm and Taiwanese firms, Lam said.

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