FocalTech Systems Co (敦泰電子), a touch panel controller designer, said that losses narrowed last quarter as gross margin rebounded into the positive after an inventory write-off.
Losses totaled NT$194 million (US$6.22 million) in the three-month period ending in March, compared with losses of NT$2.65 billion in the prior quarter and net profit of NT$10 million in the first quarter of last year, the company said in a financial statement.
Gross margin last quarter climbed to 20.96 percent, compared with 8.35 percent in the prior quarter and 20.1 percent a year earlier, it said.
“Last year was terrible for the company. We had not stepped out of the shadows in the first quarter, as we were still in the process of qualifying existing chips at new foundry fabs,” FocalTech chairman Genda Hu (胡正大) told an investors’ conference on Wednesday. “The worst is over.”
FocalTech expects momentum to grow quarterly in the remainder of the year, thanks to better capacity availability and clients’ adoption of next-generation integrated driver and controller (IDC) chips, he said.
The recovery would be across the board, with better gross margin and higher revenue for this quarter, he added.
The company has solved a capacity crunch, which had capped its chip shipments and sales growth over several quarters, by shifting some chip production to a “friendly foundry partner,” Hu said.
“With the capacity constraint problem fixed in the first quarter, we expect [chip] shipments to grow significantly from the second quarter,” Hu said.
Some clients are scheduled to launch new smartphones in the third quarter that would be equipped with its two new and advanced IDCs, which help reduce screen bezels and manufacturing costs, FocalTech said.
The Hsinchu-based company counts China’s Huawei Technologies Co (華為), Xiaomi Corp (小米) and Vivo Communication Technology Co (維沃) among its clients.
FocalTech said that it expects IDC shipments to grow between 30 percent and 40 percent this quarter from 15 million units last quarter.
IDCs contributed about 40 percent to its revenue last quarter, company data showed.
Revenue last quarter declined 19.8 percent quarterly and 37.2 percent annually to NT$4.09 billion due to foundry capacity constraints and slumping smartphone demand, the company said.
FocalTech said that it has made substantial progress in developing fingerprint sensors and has started shipping them to clients including Asustek Computer Inc (華碩電腦), HTC Corp (宏達電) and China’s Transsion Holdings Ltd (傳音控股).
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