FocalTech Systems Co., Ltd. (TWSE: 3545) today (24) held its investor conference to report its consolidated financial results for fourth quarter 2022.  

With urgent orders for some products in the fourth quarter and customers launching LTA shipments, the shipment in the fourth quarter increased significantly. Revenue in the fourth quarter of 2022 was NT$3.36 billion, a substantial increase of 41.8% compared to the third quarter of 2022. 

Affected by the active destocking of competitors, the price was facing downward pressure. Free from the inventory write-off in the third quarter of 2022, the gross margin rate in the fourth quarter of 2022 was 18.3%. Comparing to last quarter, the gross margin rate increased significantly by 102.7%. 

In terms of profit performance, FocalTech launched a lean plan in the fourth quarter to focus resources on the main products of the company’s future development, reduced unnecessary expenses through a better management system, and greatly reduced operating expenses in the fourth quarter, so the company’s operation reached break even. Net profit for the fourth quarter of 2022 was NT$ 36 million, and EPS was NT$0.14. 

In 2022, due to factors such as the Ukrainian-Russian War, geopolitics, and inflation, the end market demand decline . As a result,  FocalTech’s revenue in 2022  decreased by 41% compare with 2021 to NT$12.95 billion. 

Due to high inventory of the company and the net realizable value of some product was lower than the manufacturing cost, which made the company need to record the inventory value loss at one time, which further caused the company's profit to turn from a high point in 2021 to a loss. The full-year loss in 2022 was NT$1.93 billion, with a net loss of NT$9.39 per share.  However, with the reduction of market inventory and the unblocking of Covid in China mainland, there are indications that the market is gradually recovering. 

Although the first quarter of a year is the traditionally slow season for smartphones, yet the company is seeing some warming up after the Chinese new year. While continuing to reduce the inventory level, the company is also actively cooperating with key customers to accelerate the development of new products. It is expected that business activity will continue to increase with the arrival of the 2nd quarter.     

Company has been negotiating with manufacturing partners to resolve the LTA issues. The LTA will serve as a foundation to achieve a long-term cooperation as well as the guarantee of supply capacity with the partners. Meanwhile, the downward pressure on selling prices has gradually eased, the gross margin is expected to stabilize in the near future.

To diversify the market risk, FocalTech has been widening the product portfolio in the fields of automotive, wearables, notebook, home appliances and for industrial usages. The market downturn in the past year impacted mostly the consumer sectors, while the industrial and automotive sectors has been relatively stable or even expanding. 

With the popularity of electric vehicles and the introduction of more car screens in traditional cars, the driver chips and touch controllers used by automobiles have also shown a fast increase. After years of effort, FocalTech’s automotive solutions have successfully penetrated to tier-1 clients. It is expected that this year's shipments will again grow by double digits comparing to 2022. 

The penetration rate of AMOLED technology in the mobile phone market continues to increase. FocalTech’s touch controllers have successfully covered both glass type and plastic type of panels and for wearable and for cellphone applications. On the other hand, the display driver has been in production for wearable devices. As to the development of driver product for cellphones, the product is currently under customer's verification. Mass production is expected to start in bottom half of the year.

About FocalTech

FocalTech Group is the leader in human and machine interface technologies, providing solutions for sensing and display. FocalTech has strong capabilities in α-TFT, LTPS, and OLED display driver design, capacitive 2D/ 3D touch controller/algorithm, ITO sensing pattern, capacitive/optical fingerprint/physiological measurement algorithm. FocalTech offers TFT LCD / OLED driver IC, touch controller IC, force touch controller IC, integrated driver controller (IDC/TDDI), capacitive and optical fingerprint IC. For more information, please visit http://www.focaltech-electronics.com