Touch module maker TPK Holding Co (宸鴻) yesterday said that its net profit fell 13 percent last quarter due to the fallout from supply chain bottlenecks and a surge in transportation costs.
Disruption in key component and raw material supplies has increased pressure on customer orders, mainly for its products used in the large notebook computer and tablet sector last quarter, TPK CEO Leo Hsieh (謝立群) told investors yesterday.
“We deeply felt the pinch of a component supply crunch starting in the third quarter,” Hsieh said. “Earlier this year, we had more leeway in managing supply chain issues, as we had some stockpiles.”
Photo: CNA
The company suffered another setback in securing new orders from a major smartphone vendor, which adopted a display technology that differed from TPK’s offerings. The order loss was partly offset by an increase in supply to the customer’s older-generation phone, Hsieh said.
As there are no signs of a forthcoming ease in supply-chain bottlenecks, TPK expects continued pressure on revenue this quarter.
“We believe that some analysts’ estimates of a quarterly decline of between 5 and 10 percent for the fourth quarter should be reasonable. We will do our best to achieve that,” TPK chief strategy officer Freddie Liu (劉詩亮) said.
“Overall, we are optimistic about the fourth quarter outlook. We are seeing sustainable demand for large notebook computers and tablets. We are benefiting from the moderate growth from this segment,” Liu said
TPK’s revenue edged up 2.4 percent quarter-on-quarter, but slumped 23.4 percent year-on-year, to NT$25.17 billion (US$904.74 million) last quarter, he said, adding that the large notebook computer and tablet sector was the largest contributor, accounting for 48 percent.
The touch module supplier expects the operating profit margin this quarter to approach last quarter’s level, at 0.6 percent, due to improvement in operating spending and labor costs, as well as a decline in depreciation costs, Liu said.
TPK expects to register a better net profit this year than last, mostly on lower operating expenses, he said.
The company recorded NT$1.03 billion in net profit last year.
During the quarter ending Sept. 30, the company reported NT$279 million in net profit, a decline of 13 percent from NT$322 million from last quarter. On an annual basis, net profit dipped 37 percent from NT$443 million.
TPK said electricity curbs in China did not significantly affect the company’s production there, mostly in Xiamen, as it has obtained support from the local government to reach energy conservation goals.
Looking beyond this year, TPK said that it expects its new businesses to fuel growth. Those include a 3D printing business, equity investments on electric vehicle production and silver nanowire technology.
The company expects that silver nonowire will be used in foldable mobile phones next year following several years of development, leading to a gradual increase in revenue from 5 percent this year, Hsieh said.
The technology is mainly used in large whiteboard displays, he said.
Shipments of silver nanowire touch modules and panels should expand at least 50 percent year-on-year next year, he said.
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