TPK Holding Co (宸鴻), which supplies touchpanels for Apple Inc’s smart watches and iPads, yesterday said growing customer demand ahead of new product launches will help it swing back to profit on an operating basis in the second half of the year.
“As major customers are to roll out new phones and tablets, we believe the second quarter will be the worst period,” TPK chairman Michael Chiang (江朝瑞) told reporters on the sidelines of the company’s annual general meeting.
Outlook for the first half remains bleak, weighed by customers’ order cuts and it is looking to the second half for a reversal, but TPK’s business “will go up in the third and fourth quarters,” Chiang said.
TPK reported losses of NT$20.01 billion (US$617.93 million) last year, almost six times the company’s share capital of NT$3.46 billion. It eked out a net profit of NT$52 million in the first quarter of this year, despite an operating loss of NT$357 million.
The company is the sole touchpanel supplier to Apple Watch and competes with Hon Hai Precision Industry Co’s (鴻海精密) touchpanel manufacturing arm, General Interface Solution Holding Ltd (GIS, 業成), in supplying touchpanels for iPads.
Chiang said TPK has begun shipping touchpanels for wearable devices for some big customers recently.
An increase in orders will help drive factory utilization rate to above the break-even point next quarter, from a lower level in the first two quarters of this year, TPK chief financial officer Freddie Liu (劉詩亮) said.
“Business will climb to the peak in October or November,” Liu said.
Touchpanels for new smartphones and smartwatches will be the main growth catalysts in the second half, but the company did not expect to see revenue growth this year, given its ongoing structural adjustment, Liu said.
Chiang pledged that TPK will return to the glory days by focusing on developing innovative touch technologies and is pinning high hopes on gaining new business opportunities if Apple is to adopt organic LED (OLED) displays for its next-generation iPhone.
When asked if Apple is to use OLED displays for its new handset, Chiang said it “is very likely to happen.”
It is becoming a trend to equip phones with OLED display, Chiang said.
“TPK will benefit from this trend, if OLED display with touch features is widely adopted,” he said.
Chiang said OLED display with touch features is likely to be flexible, or foldable, which will need new touch technology to support those features, such as TPK’s silver-nanowire technology.
The company has built a patent shield in the new silver-nanowire technology as it owns 200 related patents out of 500 patents developed by the world’s first-tier companies, he said.
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