Solomon Systech Announces 2018 Annual Results
Sales Increase 19% to US$98.1 Million
- Total sales up around 19% to US$98.1 million.
- Total unit shipments increased by approximately 37% to 295.8 million units.
- Gross profit decreased by around 3.9% to US$28.2 million. Gross margin percentage down 6.9 points to around 28.7%
- Launched innovative new products as revenue drivers.
- Solomon Systech (China) Limited boosted business growth in China.
(Hong Kong – 13 March 2019) – Solomon Systech (International) Limited (“Solomon Systech” or “the Group”; SEHK: 2878) announced today its annual results for the year ended 31 December 2018 (“2018”). Sales increased year-on-year by around 19% to US$98.1 million, while total shipments were up 37% to approximately 295.8 million units. Gross profit decreased by around 3.9% to US$28.2 million. Gross margin down about 6.9 percentage points to around 28.7%. Book-to-bill ratio was 1.0.
The Group recorded a net loss of US$13.8 million, mainly due to specific provisions made for slow moving inventories, high amortization charges on IP and related investments, and decreased net finance income due to less favorable investment environment.
The increase in both sales and shipments in 2018 was mainly attributable to the growth of the large display driver IC and bistable display driver IC businesses. The Group has launched a number of new products, including the world’s first PMOLED Touch and Display Driver Integration (TDDI) IC, which has set an important industry milestone and is expected to help drive the revenue growth in 2019 and beyond. The strategically located Solomon Systech (China) Limited (or Nanjing Technology Center) helped bolster the large display driver IC business in China. The Group’s touch controller ICs, PMOLED display driver IC and bistable display driver ICs have also garnered design wins with international brands.
For the Advanced Display (“AD”) products which include PMOLED display and OLED lighting products, as well as bistable products and custom ICs, the total unit shipments increased by about 15% year-on-year to approximately 184.4 million units (2017: 160.4 million units).
The Group’s bistable display driver IC business has recorded strong growth, capitalizing on the fast-growing unmanned stores and retail automation, especially in China. The PMOLED display driver IC business in the second half year was adversely affected by reduced market demand for some applications. Yet, the Group has scored design wins with key international brands of wearables and smart home appliances, and captured the business opportunities arising from the shift in display trend from monochrome to higher resolution grayscale. The Group has also launched the world’s first PMOLED TDDI IC SSD7317, which is expected to start pilot production in the first half of 2019.
The Large Display (“LD”) products include large panel TFT LCD display driver ICs for TVs and monitors. Attributed to strategic establishment of the China business and technology center in Nanjing, the Group has greatly increased its share of the 4K UHD TV and FHD monitor businesses from its key customer. As such, the LD business witnessed strong year-on-year growth in unit shipments of around 289% to approximately 58.0 million units (2017: 14.9 million units). The Group has also successfully reached out to other customers to further enhance its revenue stream.
The other products of the Group include Mobile Touch (“MT”) products covering AMOLED and LCD touch controller ICs, and Mobile Display (“MD”) products spanning from In-Cell TDDI ICs, TFT LCD display driver ICs to MIPI bridge ICs. The total shipments of these products increased by approximately 34% year-on-year to around 53.4 million units (2017: 39.9 million units). The Group’s maXTouch® touch controller ICs have scored design wins with international brands of smartphones, tablets, smart watches and video game consoles, yet the MD product business was undermined by delays in the launch of mature LCD TDDI products.
For AD products, the innovative PMOLED TDDI IC is expected to start to contribute to revenue generation in the second half of 2019. The Group’s bistable display driver IC business is set to continue its strong growth momentum in 2019.
The Group’s LD product business is on a strong footing for growth in 2019. Apart from further increasing its share of the key customer’s business, the Group’s business with the new customer in Chengdu is also expected to ramp up.
The MT product business is expected to grow, given the new design wins scored in 2018. The Group’s new product, touch controller IC for foldable AMOLED panels, will be a key revenue driver once mass production starts in the second half of 2019.
Dr. Archie Yeh, Chief Executive Officer of Solomon Systech, said,”In 2018, we have persevered to make good progress in establishing the building blocks for a better tomorrow, though at the same time we have faced some challenges. As we venture into 2019 in an uncertain and volatile market landscape, we shall persevere to capture the bright spots for growth, in particular the ESL and smart devices markets. We shall also optimize operating margins with technologically advanced new products, efficiently manage and minimize operating expenses, and also improve inventory management. We are setting out to deliver better outcomes for our stakeholders.”
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