Largan Precision Co (大立光), the nation’s largest maker of handset lenses, yesterday reported record-low gross and operating margins in the first quarter and said it expected margins to fall further this quarter owing to weak customer demand.
The Greater Taichung-based company, which counts phone makers such as HTC Corp (宏達電), Apple Inc, Research In Motion Ltd and Nokia Oyj as major customers, saw its gross margin slide to 38.5 percent in the first quarter, from 39.72 percent in the previous quarter and 42.5 percent a year ago, according to a company statement.
Its operating margin also fell to 30.51 percent in the first quarter, from 31.72 percent in the previous quarter and 32.93 percent the year before, the company said.
In an online conference call with investors and analysts yesterday, CEO Adam Lin (林恩平) blamed the declining profitability in the first quarter to lower revenue, which fell 9.28 percent to NT$3.64 billion (US$123.8 million), from NT$4.01 billion in the previous quarter, as well as foreign currency exchange losses and lower deduction for business income tax.
During the January-March quarter, Largan made a net income of NT$882.44 million, or earnings per share of NT$6.58, down 23.95 percent from the previous quarter and 26.13 percent from a year earlier.
While the first quarter is a slow season for the global tech industry, with sales usually picking up in the second quarter, Lin said that would not be the case for Largan this year despite new smartphone launches by HTC.
Lin said the number of customers adjusting their orders downward outweighed those adjusting them up in the second quarter, adding that market sentiment remained cautious amid uncertainty over the global economy.
Lin did not specify which customers were cutting orders this quarter. He only said the company expected a double-digit sequential decline in revenue this quarter, while higher sourcing costs linked to a key component — voice coil motors (VCM) — would continue to squeeze profit margins.
“Based on current order visibility, the company is likely to see stronger sales growth in the second half of this year,” he said.
A breakdown of the company’s sales showed that handset lenses accounted for 95 percent of overall sales in the first quarter, while those used in digital cameras and multifunctional projectors accounted for 3 percent and 2 percent respectively.
Largan said it saw increased shipments of high-end 8-megapixel (MP) lenses, which accounted for about 50 percent of total handset lens shipments in the first quarter.
They would continue to be the main revenue driver this year, it said.
However, rising sourcing costs for VCM — one of the three auto focus actuator technologies used in camera lenses — which Largan assembles with the 8MP lenses, would continue to erode the company’s gross margin, Lin said.
Largan closed down 0.19 percent at NT$536 on the Taiwan Stock Exchange yesterday before first-quarter results were released.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS