Young Fast Optoelectronics Co Ltd (洋華光電), which counts Samsung Electronics as one of its major clients, yesterday reported a second quarterly loss, citing overcapacity and intensive price competition from Chinese rivals.
Losses widened to NT$299 million (US$10.09 million) in the quarter ending Sept. 30, compared with NT$202 million in losses during the second quarter, according to the company’s financial statement. That reversed a quarterly net profit of NT$31 million a year ago.
Because of a low factory utilization rate, gross margin shrank to 0.8 percent last quarter from 11.7 percent in the previous quarter and 10.1 percent in the same period last year.
Gross margin is expected to be flat this quarter, Young Fast said.
Young Fast chairman Pai Chih-chiang (白志強) expects a “tough period” this quarter.
“Supply still exceeds demand, and Chinese maker O-film Tech Co Ltd (歐菲光) continues to adopt a low-price strategy to vie for more orders,” Pai told investors during a teleconference.
Pai said the Shenzhen, China-based touch sensor manufacturer offered prices up to 20 percent lower than Young Fast.
“It is a price that is below our cost level,” Pai said.
He attributed order reduction in this quarter to Chinese rivals’ pricing strategy.
Youg Fast forecast revenue would decline this month and next month at a similar pace as it did last month, during which Young revenue plunged 28 percent monthly to NT$510 million from September’s NT$707 million. On an annual basis, last month’s revenue plummeted 70 percent from NT$1.35 billion.
To cope with intensive competition amid an industry slowdown, Young Fast is streamlining its production lines. The company plans to make touch sensors in its plants in Vietnam and in Huizhou in China’s Guangdong Province, while streamlining its workforce in its factories in Shenzhen.
Samsung and other South Korean firms accounted for 30 percent of Yuong Fast’s total revenue of NT$2.14 billion last quarter.
Young Fast chief financial officer Sharon Ho (何逢有) said the company is expected to book as much as NT$800 million from its personnel restructuring this quarter.
The firm now ships more touch sensors used in mobile phones and is expanding to touch sensors used in tablets and notebook computers, Pai said. However, progress is not as good as the company had expected because demand has been slow for notebook computers with touch features, he said.
Young Fast plans to massively produce new low-cost metal mesh touch sensors mostly for notebooks at the end of next quarter, Pai said.
Separately, HannStar Display Corp (瀚宇彩晶), which makes flat panels mainly for mobile devices, yesterday posted a third quarter net profit of NT$2.19 billion, or NT$0.75 per share.
That represented a 13 percent sequential decline from the second quarter’s net income of NT$2.52 billion. HannStar lost NT$321 million in the third quarter of last year.
Gross margin fell slightly to 36 percent last quarter from 37 percent in the second quarter. Average selling prices rose slightly to US$66 from US$63.
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