TPK sees strong touchpanel sales in fourth quarter

PROFIT DRAG::TPK said that it may book a huge non-operating loss from asset write-offs and a goodwill impairment charge from Cando Corp

By Camaron Kao  /  Staff reporter

Fri, Nov 01, 2013 - Page 13

TPK Holding Co Ltd (宸鴻), one of Apple Inc’s touchpanel suppliers, yesterday said it expects sales this quarter to rise by between 15 percent and 25 percent from NT$29.47 billion (US$1 billion) a quarter ago, as companies prepare to launch new products, including Apple’s new iPad.

“As most companies started manufacturing new products this quarter for the Christmas holiday, sales of touchpanels will improve sequentially this quarter,” company spokesman Freddie Liu (劉詩亮) said at an investors’ conference.

However, the company expects its operating margin to drop to between 2 percent and 3 percent this quarter from 4 percent last quarter, much lower than the 12.3 percent recorded in the same period last year, as the upcoming launches of low-priced smartphones and tablets by clients weigh on TPK’s pricing.

“Most clients care more about the price and less about the quality, and we have to compete with a lot of newcomers in the market,” Liu said.

Demand for high-end smartphones and tablets during the first half of this year was lackluster, while sales of low-priced products, especially those from China, posted the strongest growth, Liu said.

The company’s net profit this quarter may also be affected by a projected non-operating loss of between NT$1.7 billion and NT$2.2 billion, Liu said.

TPK will write off about NT$700 million in assets that are old and less used, and recognize a goodwill impairment charge from Cando Corp (達鴻), its local touch- panel subsidiary, of between NT$1 billion and NT$1.5 billion, he said.

The company did not provide a more detailed earnings guidance for this quarter.

The company also plans to delay the operation of its Chinese factory in Fujian Province, which produces large size touchpanels using one-glass-solution technology, from next month to the second quarter next year because the penetration rate of touchscreen notebooks has not risen as rapidly as expected, Liu said.

“We will wait for the market demand to rise before we put the factory into operation,” Liu said.

“Even if the demand for touchpanels does not increase as fast as predicted, we think tablet PCs will one day need to use larger-size touchpanels,” he said.

In the third quarter, TPK posted a profit of NT$1.01 billion, down 67.7 percent from last quarter and 69 percent from a year ago, as its average selling price dropped amid rising competition and weak sales of touchpanels for cellphones, notebooks and all-in-one PCs.