Hurt by sluggish demand for chips used in smartphone displays and massive inventory write-offs, touchpanel controller supplier FocalTech Systems Co (敦泰電子) yesterday posted NT$2.65 billion (US$86.09 million) in losses for last quarter.
The results were not only a reversal from the net profit of NT$76 million posted for the third quarter, but a drastic increase from the NT$270 million loss recorded in the fourth quarter of 2017.
Gross margin dipped into the negative territory for the first time in the firm’s history, to minus-8.35 percent, compared with 24.4 percent the previous quarter and 20.4 percent in the fourth quarter of 2017, the company’s financial statement showed.
Last year as a whole, losses swelled to NT$2.49 billion, compared with the NT$103 million loss posted for 2017, the statement said.
Customers last quarter scaled back orders for the firm’s three major products — integrated driver and controller (IDC) chips, display touch controllers and display driver ICs — due to a weakness in smartphone demand and the US-China trade dispute, the company said.
FocalTech also booked NT$2 billion in write-offs for the fourth quarter as a significant market share loss eroded its book value of goodwill and caused a decline in related intangible assets.
The company blamed its market share loss in the IDC chip market on improper competition and wafer supply constraint.
IDC chips were once the firm’s star product and a growth driver.
Its financial problems are not over yet, as it will take time for customers to certify its new chips, and the industry is facing seasonal slow demand for smartphones in the first quarter, chairman Genda Hu (胡正大) told an investors’ conference.
The company expects to see a marked recovery in the second half of the year, he said.
It also expects to see an increase in IDC chip shipments this year, thanks to rising penetration rate for the chip, and it has secured designs from customers for two of its new-generation IDC chips this quarter.
It is tapping into the new AMOLED segment by engaging with panel customers to supply display drivers, and expects to start mass production of driver ICs for AMOLED later this year, it said.
Jih Sun Securities Investment Consulting Co (日盛投顧) forecast FocalTech’s sales for this quarter would be NT$1.61 billion, down 21.12 percent from the previous quarter and 38.35 percent lower than a year earlier.
It revised downward its earnings per share forecast for this year to NT$0.38, compared with the NT$1.57 it estimated earlier, according to a research note on Monday last week.
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