Fri, Jul 12, 2024 page12

• Largan records 21.7% net profit growth

  OUTLOOK: The company said revenue would grow this month and next month, but remained conservative about smartphone sales as phone makers are not optimistic

  • By Lisa Wang / Staff Reporter
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  Largan Precision Co (大立光), a major camera lens supplier for Apple Inc’s iPhones, yesterday posted 21.7 percent annual growth in net profit for last quarter and said it expects factories to be fully utilized in the second half of the year, given demand for increasingly complex manufacturing processes.

  Net profit rose to NT$4.5 billion (US$138.4 million) last quarter, compared with NT$3.7 billion in the second quarter of last year. However, on a quarterly basis, net profit plummeted 26.35 percent from NT$6.11 billion. That brought first-half net profits to NT$10.61 billion, up 51.79 percent from a year ago.

  Earnings per share jumped to NT$79.49 from NT$52.33 in the same period last year.

  

  Largan Precision Co CEO Adam Lin is pictured in an undated photograph.

  Photo: CNA

  Largan said most of its factories would run at full capacity in the third and fourth quarters, as it has to boost inventories for customers.

  Revenue would grow sequentially this month and next month, Largan CEO Adam Lin (林恩平) told an online investors’ conference yesterday.

  However, visibility for September is vague, he said, but added that yields should improve further.

  That would set the scene for Largan to see a pickup in gross margin this quarter, from 48.41 percent last quarter, the lowest in the past three quarters, as utilization, yields and product mix are deciding factors.

  However, Largan said it remained conservative about the sales outlook for smartphones in the second half.

  The issue would be more on end consumers’ willingness to spend on phones, as phone makers have learned to manage inventory prudently, Lin said.

  “Nobody feels optimistic. Most cellphone brand names do not expect sales to be strong. Customers are not hopeful about good sales,” Lin said. “They anticipate smartphones with artificial intelligence [AI] features might sell better. But that is just their anticipation.”

  Some customers are slowing down equipping new phones with AI features, as component costs are inflated, he said, adding that customers are reluctant to upgrade camera lenses.

  Most customers are upgrading camera lenses to adopt eight pieces of plastic lenses and very few have adopted hybrid lenses, which are plastic and glass lenses together, Lin said.

  Additionally, clamshell phones tend to use fewer lenses, but those lenses are usually thinner and require a higher technology threshold, Lin said, implying that those camera lenses deliver better average selling prices and gross margin.

  Asked if Largan has secured long-term supply agreements with its key customers, Lin said: “It is nothing special. We usually discuss with customers about the volume for next year in order to prepare our capacity, since most of Largan’s products are customized.”

  Speculation swirled on Wednesday that Largan had landed a long-term agreement with Apple due to its strong intellectual property portfolio.

  It is very rare for Apple to sign long-term supply contracts with its component suppliers.

  Asked about capacity expansion, Largan said it plans to move in new equipment to a new factory this quarter, which would quickly be fully utilized in the fourth quarter. The company is planning to build another new factory with twice the floor size of the last one.

  The new fab would be ready in the third quarter next year, Lin said.
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