Press Release

Solomon Systech Announces 2023 Interim Results

Stable Demand for the Group’s Products with Shipment Volume Up 3.6%
Mobile Display and Mobile Touch IC Business Maintained Good Momentum

Financial Highlights:

  • Sales revenue amounted to US$85.3 million
  • Gross profit was US$27.9 million with a gross margin of 32.7%  
  • Profit attributable to owners of the parent was US$13.2 million
  • Shipment volume increased by 3.6% to 176.5 million units in 1H 2023
  • Earnings per share were US$0.53 cents (Equivalent to HK$4.11 cents)

(15 August 2023 – Hong Kong) Solomon Systech (International) Limited (“Solomon Systech” or the “Company’’; Stock Code: 2878) announced the interim results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 30 June 2023 (the “Period”).

In the first half of 2023, the global economy was not recovering as expected. Combined with a persistent high level of inflation, it has led to a slow recovery in demand for consumer electronics and a prolonged inventory de-stocking in the semiconductor industry. However, benefiting from the stable market demand for the Group’s products, the shipment volume for the Period reached approximately 176.5 million units (1H 2022: 170.3 million units), representing a year-on-year increase of 3.6%.

During the Period, businesses faced cost pressures while foundries held firm to their prices, thereby unable to timely alleviate the downward price pressure of end products. Under such circumstances, the Group’s profitability during the Period was inevitably affected, but it was still significantly better when compared to that in the second half of last year. The Group’s sales revenue amounted to US$85.3 million, representing a decrease of 21.4% over that of the same period last year, with a gross margin of 32.7%. Due to the decrease in overall sales revenue, coupled with a disproportionate decrease between average selling prices of products and the cost of certain products, the profit attributable to owners of the parent during the Period decreased by 39.5% year on year to US$13.2 million. Earnings per share were US$0.53 cents during the Period. The Board resolved not to declare any interim dividend for the Period.

Business Review

New Display ICs

During the Period under review, New Display IC business faced a slowdown in demand and keen competition in the market. On the demand side, retailers who are interested in switching to Electronic Shelf Labels (ESL) have been waiting for the launch of the new generation four-colour display, thus slowing down the sales of the current three-colour display labels. Moreover, a lacklustre consumer electronics market has prompted some semiconductor companies to switch their focus to electronic paper IC, which has resulted in increased competition. Based on the aforesaid factors, revenue from the New Display IC products dropped year on year.

OLED Display ICs

The Group is the world’s number one PMOLED display driver IC player with a dominant market share in terms of shipment volume during the Period. During the Period, the Group launched the world’s first small-sized passive matrix micro-LED display driver IC – SSD2363, which can be applied to next-generation high brightness displays of three inches or less for wearable devices, home appliances and industrial appliances. Micro-LED is regarded as the next-generation of display, and is poised to bring about more possibilities for future display technology.

Mobile Display and Mobile Touch ICs

The demand for game console controller ICs that require more accurate controls, faster response and longer battery runtime is growing fast. The demand for the Group’s game console controllers and MIPI Bridge ICs remains steady, and the Group has successfully secured manufacturing orders for year 2024, making a notable contribution to the Group’s sustainable revenue base.

Large Display ICs

Although there is an unsatisfactory performance in the sales of Large Display ICs in the post-pandemic era, the Group managed to carry out mass production of driver ICs for 23.8-inch gaming monitors with a high-refresh-rate of 100Hz and 43-inch smart HDTVs in conjunction with panel makers and international brands. With the recovery in consumer market, it is expected that the inventory level of TV monitors will be substantially depleted after the second half of 2023, driving the sale of Large Display ICs.

New Technology and Product Highlights

The technology competition in the global semiconductor industry has never slowed down. It is extremely important to achieve independent innovation and enhance R&D capabilities. In the international market, large retailers are deploying automation technologies such as ESL at a steady pace. The Group has supported E Ink in developing the Display IC Solutions that enables a four colour spectrum display for Spectra™ 3100, a next-generation specialised platform for ESL and retail signage application. This product is expected to be launched in the second half of 2023, enabling a high growth potential for the Group’s New Display IC business in the future.

As global businesses are becoming more environmentally conscious, energy-efficient displays will be prevailing for future development. The Group is developing large display applications in addition to ESL, such as large-scale colour electronic retail signage with a size of over 20 inches, which is expected to be put into mass production in the second half of 2024. It will help to further expand the application of the Group’s IC products in electronic paper.

Outlook and Strategies

As the effects of wafer price reductions start to be reflected in the second half of this year, the cost pressure on semiconductor companies will gradually ease, which will be favourable to the Group’s business development going forward. Until market sentiment improves, the Group will endeavour to control costs, continue to focus on technology development and high value-added products while improving product portfolio to enhance operational efficiency.

Looking ahead, Mr. Wang Wah Chi, Raymond, Chief Executive Officer of Solomon Systech said, “The semiconductor industry is on the way of de-stocking. It is expected that the trend will come to an end by the end of 2023. Market demand is expected to pick up then. With the anticipation that global economic activities will be more active in the second half of this year, there will be more opportunities for collaboration in product development between semiconductor companies and downstream players, which will represent a growth potential for the Group’s business. Looking ahead, the Group will adopt a cautious yet flexible strategy for each of its business areas, with a view to capitalising on the rebound of the market.”

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