FocalTech Systems Co., Ltd. (TWSE: 3545) today (12) held its investor conference to report its consolidated financial results for first quarter 2023.  

The first quarter is the traditionally slow season of the year due to the Chinese Lunar New Year holidays. However, the epidemic situation has subsided rapidly and economic activities increased significantly in China mainland. Sales with short orders boosted the revenue in March better than expected. Revenue in the first quarter of 2023 was NT$3.23 billion, which is 17% decrease year-over-year, or 4% decrease compared to the previous quarter. 

In the first quarter, the company actively reduced the high-cost inventory but negatively impacted the gross margin. At the same time, the company has successfully cut the overall manufacturing cost. As a result, the gross margin rate was 18.8%, a slight increase of 0.5% quarter over quarter. 

The company has continuously tightened the operations and pushed for productivity improvement since the fourth quarter of last year. The continuing reduction in non-R&D expenses led to the over-all operating expense decline in the first quarter. The net income of the first quarter was NT$50 million and the EPS was NT$0.25, or 40% increase over the previous quarter. This is the 2nd consecutive profitable quarter after the loss in the 3rd quarter of last year. 

Even there has been no noticeable sales recovery of the mobile market in China mainland for the past few months, yet we do see some good progress in the emerging markets, such as in Southeast Asia, India and Latin America. With the continuing reduction of inventory level in the down-stream cellphone supply chain, we expect the revenue from the sell-through activities in the second quarter will become modestly better than the first quarter.   

As the revenue is recovering, the production also gradually resumes to its normal pace. The long term agreements (LTA) are no longer an issue with either customers or suppliers. The company keeps reducing the production cost by improving the yield for the existing product. Moreover, the company is accelerating the development of competitive new products through investing more in R&D. 

Due to relatively long verification cycle for Automotive and PC products, several designs won in early last year will begin to enter mass production in the second quarter of this year. The shipment of AMOLED touch products will return to normal sales level because the anticipated growth of POLED panels produced by Chinese mainland manufacturers. However, gross margin rate remains uncertain in the near future due to the uncertain contribution from the old high-cost inventory. 

The development of smartphone AMOLED driver IC is on schedule and making satisfactory progress. Currently, the lead product is at the final stage of verification. The production shipment is expected to begin in the 2nd 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