Touchpanel controller supplier FocalTech Systems Co Ltd (敦泰科技) yesterday said it expects revenue to grow about 5 percent sequentially this quarter, benefiting from increasing demand for premium smartphones in China.
However, shipments of driver ICs used in LCD panels and conventional touchpanel ICs are likely to be capped by a short supply of LCD panels, company president Liao Ming-cheng (廖明政) told an investors’ conference.
“Mobile phone demand in China has continued to be healthy in the fourth quarter, but a short supply of LCD panels could dampen [FocalTech’s] shipments,” Liao said. “The supply constraint could extend from the third quarter into the first quarter of 2017.”
The bright spot lies in the company’s new integrated driver and controller (IDC) chip for in-cell touchpanels.
IDC shipments are forecast to grow 50 percent sequentially this quarter, helping offset the adverse impact from a panel shortage, Liao said.
The IDC is a single chip that allows manufacturers to design devices with smaller form factors and save on material costs, the company said.
After three years of development, IDC shipments doubled last quarter from a quarter earlier, as Chinese mobile phone vendors, such as Xiaomi Corp (小米) and Huawei Technologies Co (華為), adopted the chip for their latest smartphones, FocalTech said.
IDC chips, which offer a higher-than-average gross margin, accounted for about 10 percent to 15 percent of the company’s revenue totaling NT$3.06 billion (US$96.95 million) last quarter, the company said.
A rising penetration rate should lend support to the chip’s growth next year, FocalTech said.
The company expects about 10 percent of an estimated 1.6 billion handsets next year will be equipped with full in-cell IDC touchpanels.
That represents a big opportunity for growth, with chairman Genda Hu (胡正大) saying that the company is looking at possibly shipping at least 100 million IDC chips next year.
Hu did not disclose the company’s IDC shipment target for this year.
The company expects to ship 600 million driver and touchpanel ICs this year, he said.
Last year, it shipped 700 million chips.
During the quarter ending Sept. 30, net income jumped 31 percent to NT$93 million, from NT$71 million in the second quarter, the company said yesterday.
That translates into earnings per share (EPS) of NT$0.32, up from NT$0.24 in the prior quarter.
Gross margin rose for a sixth straight quarter to 20.5 percent last quarter, as the company shipped more higher-margin chips, including new driver ICs for 2K touch panels.
FocalTech expects margins to further improve this quarter as it boosts shipments of higher-margin chips, Liao said.
Net profit in the first three quarters plunged 71 percent to NT$65 million, compared with NT$222 million in the same period last year. EPS were NT$0.22, down from NT$0.54 last year.
FocalTech shares yesterday tumbled 4.63 percent to NT$31.95 in Taipei trading, underperforming the TAIEX, which fell 1.44 percent.
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