Touch module supplier TPK Holding Co (宸鴻) yesterday reported that net profit dipped 51 percent annually last quarter to its lowest in two years, as demand slumped from key smartphone clients and component shortages constrained shipments.
Net income fell to NT$118 million (US$4.21 million) last quarter, compared with NT$241 million in the fourth quarter of 2020. That represents a quarterly decline of 58 percent from NT$279 million.
TPK sank to an operating loss of NT$88 million, the largest since the fourth quarter of 2019.
Photo: Chen Mei-ying, Taipei Times
Gross margin dropped to 3.8 percent, from 4.8 percent a year earlier and 4.6 percent a quarter earlier.
“Our output has fallen since the industry entered the slow season in November,” TPK chief strategy officer Freddie Liu (劉詩亮) told investors on a videoconference.
“Some older smartphone models, which are equipped with our touch panels, are approaching the end of product cycle, leading to a decline in our factory utilization,” he said.
“We have not received orders for new smartphone models from one client in two years,” he added.
TPK managed to mitigate a significant decline in smartphone touch panel shipments by expanding to notebook computer and tablet segments, which together made up about 70 percent of TPK’s shipments last year, Liu said.
TPK saw net profit last year grow 3.6 percent to NT$1.07 billion, compared with NT$1.03 billion in 2020. Earnings per share rose to NT$2.63 from NT$2.53.
The company said it expects a quarterly reduction of 5 to 10 percent in revenue this quarter, based on its financial performance in the first quarters over the past few years.
“The visibility is hazy, now that the Russia-Ukraine conflict has increased uncertainty,” Liu said. “We are not sure how the supply chain and end market demand will be affected by such a political and economic situation.”
Nevertheless, TPK said it expects the tight supply of key components and port gridlock to improve next quarter.
Regarding when the company’s unique silver nanowire touch module technology would be used in foldable phones, TPK CEO Leo Hsieh (謝立群) said that “there will be slim chance to see that happen this year.”
Clients are facing challenges in developing displays, mechanical parts and cover glasses suitable for foldable phones, he said.
To fuel revenue growth, TPK is concentrating on expanding its liquid-crystal module (LCM) business, which integrates its touch sensor into LCD panels.
Hsieh said that TPK might expand LCM capacity this year to cope with rising customer demand, after quadrupling capacity last year.
TPK plans to spend NT$1.3 billion this year, compared with NT$790 million last year.
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