E-paper display supplier E Ink Holdings Inc (元太科技) yesterday gave a positive outlook for the second half of the year as its customers prepare to launch new e-reader and e-notebook models that should fuel growth.
After exiting the lower-margin LCD industry last quarter, the company said it is now concentrating on expanding uses for e-paper displays to diverse applications such as e-notebooks, smart cards and multicolored electronic shelf labels for retailers and logistics operators.
“We see year-on-year growth in the e-reader business in the second half during the peak season, primarily driven by rising demand from China and emerging markets,” Frank Ko (柯富仁) told an teleconference in Taipei.
E Ink is a long-time e-paper display supplier for e-readers sold by Amazon.com Inc and Rakuten Kobo Inc.
There are growth opportunities in the company’s new product lines, such as e-notebooks, Ko said.
“We have been actively developing e-notebooks over the past one to two years together with our key customer,” Ko said
E-ink has teamed up with Sony Corp in a joint venture to develop a laptop product integrating its technology.
“This year is an important year for us to pitch this product to the market,” Ko said. “We are seeing replacement demand from the healthcare sector to the financing and education sectors,” Ko said.
This year as a whole, e-readers and e-notebooks are expected to contribute more than 70 percent to E Ink’s overall revenue, he said.
E Ink has also made progress in promoting its e-paper displays for ‘smart’ credit cards, point-collection cards and public transportation cards, Ko said.
France’s major banks and Korea Telecom Corp are to equip their credit cards or debit cards with e-paper displays to enhance security, he said.
While those new applications may take some time to make significant revenue contribution, Ko said the company is expecting growth in its major electronic shelf labels in the second half of the year.
Chinese retailers, such as a new supermarket funded by Alibaba Group Holding Inc (阿里巴巴), are joining their peers in the US and Europe in adopting electronics shelf labels, Ko said.
Electronic shelf labels would make up between 15 percent and 20 percent of E Ink’s revenue this year, making them the firm’s second-biggest source of revenue, he said.
Given the rising contribution from higher-margin products, Ko said “gross margin in the second half will remain above average for the company.”
Last quarter, gross margin climbed to 40.1 percent, the best result since 2002, company data showed.
E Ink’s operating income last quarter soared 71 percent to NT$293 million (US$14.5 million), from NT$171 million in the same period last year.
Royalty income, an important contributor to the company’s bottom line, is expected to remain stable this year, Ko said.
E Ink last year booked NT$2.25 billion in royalty income. It made NT$870 million from royalties in the second quarter of this year.
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