FocalTech Systems Co (敦泰電子), a supplier of driver and touch controller ICs used in flat panels, yesterday said it swung back into profit last quarter after four straight quarters of losses, thanks to improving wafer capacity supply and increased demand for new phones.
Affected by capacity constraints, the company saw its share of the touch and display driver integration (TDDI) IC market nosedive to 18 percent in the first half of this year from a peak of 50 percent, it said.
However, “capacity constraint is no longer an issue in the fourth quarter, or 2020,” FocalTech chairman Genda Hu (胡正大) told an investors’ conference in Taipei.
“We are bullish about 2020,” he added.
With shipments of new products scaling up, FocalTech expects to see its share of the TDDI chip market rebound to 30 percent, Hu said, adding that average selling prices should climb as well.
Hu said that next-generation integrated driver and controller (IDC) chips for high-end models, 5G phones and affordable phones are to become the company’s major revenue contributors next year.
The company is also developing under-display fingerprint scanning technologies for advanced AMOLED and LCD panels used in smartphones, it said.
FocalTech last quarter posted net earnings of NT$73 million (US$2.39 million), compared with losses of NT$135 million in the second quarter.
On an annual basis, net profit was down 4 percent from NT$76 million in the same period last year.
Chinese mobile phone vendors Huawei Technologies Co (華為), ZTE Inc (中興) and Xiaomi Corp (小米) are using FocalTech’s IDCs in their new smartphones, it said.
In addition, the much-talked-about smart displays with video-calling feature from Facebook Inc and Baidu Inc (百度) are both equipped with FocalTech’s chips, it said.
FocalTech expects the growth momentum to extend into this quarter, suggesting an above seasonal performance in the final three months of the year.
“The fourth quarter is usually a weaker season compared with the third quarter,” Hu said. “However, due to the continuous increases in design wins [from Chinese smartphone makers], we expect the growth trend to continue and lift overall shipments over third-quarter levels.”
As a result, revenue is forecast to grow mildly this quarter from NT$2.57 billion last quarter, Hu said.
However, mounting pricing pressure from new competitors could eat into gross margins this quarter, he said.
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