Largan Precision Co (大立光) yesterday reported a 0.96 percentage point quarterly decrease in gross margin to 59.33 percent last quarter, down 6.25 percentage points from a year earlier, due to an unfavorable product mix and rising competition.
Gross margin fell to the lowest level on a quarterly basis since 2015, according to data provided by the Taichung-based handset camera lens maker.
Largan, a supplier to Apple Inc’s new iPhone 13 series, posted net profit of NT$5.26 billion (US$188.2 million) in the third quarter, up 77.72 percent quarterly, but down 10.35 percent annually.
Photo: Liao Cheng-hui, Taipei Times
Third-quarter earnings per share were NT$39.22, compared with NT$43.71 a year earlier and NT$65.38 in 2019, before the onset of the COVID-19 pandemic.
Largan claims to be the industry leader in optical technology, but as customers use mid-specification lenses instead of the company’s high-end products, coupled with the increasing saturation of the smartphone market, it has faced two years of shrinking revenue, lower profit and a falling stock price.
Largan chief executive officer Adam Lin (林恩平) said he remains optimistic about the company’s business outlook, adding that the company has new solutions for long-standing problems in optical products.
The company has overcome “major breakthroughs” in engineering challenges that have “plagued the optical field for years,” and would produce a new generation of camera lenses that can reduce problems such as glare, Lin told an investors’ conference.
“We have seen more clients choose to design-in higher specification lenses. Of course the sales number is still unknown,” Lin said, adding that some are choosing 8P lens modules, with pixel counts of up to 100 or 200 million.
8P refers to a camera lens module that contains eight thin layers of plastic pieces. The higher the layer count, the more advanced the lens.
In January, Apple confirmed that it would stick to 7P lens for iPhones until 2023.
The firm is also developing “double freeform” optical lenses that would solve proportion issues that cause some people in a photograph to appear larger than others.
However, customers are often reluctant to confine their suppliers to a single source, as it limits their ability to negotiate and makes them reliant on a single company.
“We are waiting to go into production on those advanced products as soon as customers see fit to go ahead with them,” Lin said.
Largan shares have fallen by more than 30 percent this year.
Lin, who seldom comments on stock prices, said that Largan is contemplating stock buyback programs.
Plans to expand production capacity by 2023 remain unchanged, he said.
While handset lenses remain Largan’s mainstay products, the company is also expanding into augmented and virtual reality, and automotive camera lens markets, he added.
“As long as a reasonably sized market exists, we will go for it,” Lin said.
Largan shares rose 1.91 percent to close at NT$2,130 yesterday in Taipei.
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