E-paper display supplier E Ink Holdings Inc (元太科技) yesterday said that its revenue would be flat this quarter from last quarter, despite slow-season effects, as demand for e-paper displays used in Amazon.com Inc’s e-readers and those of other vendors gained momentum.
The forecast bodes well for E Ink’s outlook, as its revenue usually declines in the final quarter.
“It is a special year for the e-reader market, as our major client encountered some situations. Fortunately, the client launched new products in November,” E Ink president Johnson Lee (李政昊) told an investors’ conference. “We believe that the e-reader market will return to normal levels next year.”
The Hsinchu-based company has seen revenue lose steam since the first half of the year after its biggest client struggled to introduce new e-readers during a product transition period.
E Ink’s revenue shrank 17.2 percent to NT$3.97 billion (US$128.5 million) last quarter from NT$4.79 billion in the third quarter last year.
About 70 percent of E Ink’s revenue came from e-paper displays used in e-readers.
“The fourth quarter of 2018 will be little changed from the third quarter,” Lee said.
In addition to recovering demand from e-reader clients, the company also sees exuberant demand for e-displays used in electronic shelf labels (ESL).
“We are expanding capacities at our plant in New Taipei City’s Linkou District (林口) to cope with strong demand this year. Our factory is fully loaded for the second half. The capacity expansion will not be sufficient enough to satisfy demand,” Lee said.
“We are also considering using our US plant to manufacture ESL products in 2020,” he said.
E Ink supplies ESL products to the world’s major retailers, including supermarket chains funded by Alibaba Group Holding Ltd (阿里巴巴) in China, electronic retailer BestBuy Co in the US and Carrefour SE.
However, Lee said that the US-China trade dispute is slowing ESL adoption in China, as Chinese retailers became cautious about new investments.
E Ink’s net income plunged 28.4 percent to NT$840 million last quarter, compared with NT$1.17 billion a year earlier, while earnings per share dropped from NT$1.04 to NT$0.74.
On a quarterly basis, net income dropped 2.5 percent from NT$861 million, or earnings per share of NT$0.77.
Royalty income, a cash cow for E Ink, fell slightly to NT$448.11 million last quarter from NT$454.62 million in the third quarter last year.
Royalty income is expected to drop slightly next year amid a lackluster sales outlook for consumer electronics.
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