Solomon Systech (International) Limited Delivers Encouraging Performance in The First Half of 2021
Net Profit Boosted by 143.1% YoY Success in Optimizing Product Mix
- Revenue increased by approximately 27.7% to US$74.8 million
- Gross profit was US$29.1 million, surged by 92.4%
- Gross margin was 38.9%, increased 13.1% points
- Profit attributable to owners of the parent was US$10.7 million
- Earnings per share was 0.43 US cent (equivalent to 3.33 HK cents)
- Book-to-bill ratio reached 2.0
(HONG KONG, 18 August 2021) Solomon Systech (International) Limited (the “Company’’; SEHK: 2878) announced today its interim results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 30 June 2021 (the “period under review”). It recorded an encouraging results with a profit attributable to owners of the parent of US$10.7 million, a strong growth of 143.1% compared to the same period last year, mainly attributable to our strategies to optimize product mix focusing those with a higher gross profit margin. The Group’s total revenue achieved a significant increase of 27.7% to US$74.8 million, total shipments recorded a growth of 19.3% to approximately 209.4 million units. Gross profit surged by 92.4% to US$29.1 million year-on-year. And the gross margin reached 38.9%, representing a growth of 13.1 percentage points. The overall book-to-bill ratio reached 2.0.
Leverage on the Group leading innovation capability and agility in tapping into market trends, we achieved encouraging results and performance in 1H21. We optimized our product mix with a focus on products of emerging demand that benefited from the evolving market trend, including those with a higher gross profit margin.
New Display (“ND”) products mainly refer to our bistable display products. Bistable display is a non-traditional display technology where the display device is illuminated by reflecting ambient light. In the first half-year of 2021, the Group’s R&D team has overcome challenges to manipulate multiple driving voltages. The successful launch of Spectra™ 3100, the next-generation electronic paper (e-paper) display, echoed the Group’s unwavering commitment to go the extra mile and its perseverance to achieve and excel. The group has envisaged the potential of e-paper display technology and has never stopped researching the latest technologies. Spectra™ 3100, the next-generation ink platform launched by E Ink Holdings in the first half of 2021, evidenced the technological advancement of the Group.
Additionally, the Group has achieved a significant ESL project from two leading ESL System Integration Solution Providers in early 2021. It is expected that the ESL with Solomon Systech’s display IC will be massively launched in the top ranked supermarkets in Europe in 2022, with approximately 10 million units of ESL per year to be launched in the market.
OLED display products include PMOLED bistable display products, micro-LED/mini-LED products and OLED lighting products. Notably, Solomon Systech is the world’s number one PMOLED display driver IC player with a market share of over 70% in terms of unit of shipment in 2020. PMOLED has been adapted in the world’s most popular home video game consoles and gaining a larger market share in mid to high-end smartphones, leading to increasing demand for high-speed, low-power consumption interfaces. PMOLED TDDI ICs demonstrate colossal market potential and remain one of the key development targets of the Group. In particular, the demand for mobile devices in China and the consumer sentiment have continued to boom in 2021, which ultimately helped to boost the Group’s revenue for the OLED display business.
During the period under review, the Group launched the production of the SSD7317 – the world’s first Touch and Display Driver Integration (“TDDI”) IC for targeted use in smart home products. This innovative breakthrough is now poised to take the product user experience to new heights. The Group has achieved related design-in projects and has commenced mass production of the IC for adoption in smart thermostat electric kettles.
Handheld healthcare devices received overwhelming demand during the pandemic since higher healthcare standard in working and living environment was maintained globally after the outbreak of COVID-19, which in turn drove our sales in OLED display business during the period under review.
Into 2021, the Group is devoting more resources to developing new micro-LED products and aspires to attain technological breakthroughs of its market-leading micro-LED display IC solutions. The group provides total solutions from design to mass production delivery in micro-LED display IC. The Group possesses the most advanced IP database dedicated to the micro-LED display and is well-positioned to offer the ultimate solution for micro-LED display driver applications. The Group has signed strategic cooperation agreements with industry-leading companies and obtained orders, laying a foundation for the mass production of related products in the near future.
Mobile Display and Mobile Touch
The Group’s Mobile Display and Mobile Touch (“MDMT”) products include In-Cell Touch Display Driver IC (TDDI), TFT Display Driver IC, STN Display Driver IC, MIPI Bridge IC, and Touch Controller IC.
In the first half of 2021, the Group has developed a number of new driver products and custom ICs and launched IoT TDDI for the application in wearable products. It is the world’s first TDDI chip for IoT and wearable application with excellent touch and ultra-low power consumption performance. At the same time, in the view of increasing demand on quality and speed of gaming experience, Solomon Systech also stepped into the game controller sector, designed its touch controller IC to achieve the world’s number one latest game console controller. It is foreseeable that the game console controller IC could continue to contribute to the revenue stream in the coming two to three years. It is also a joint development human interface display platform, and a sole partnership with a leading small-to-medium sized TFT-LCD panel maker.
In addition to ND, OLED and MDMT products, the Group also offers another range of display products, such as Large Display (“LD”) products including large panel TFT LCD display driver ICs developed for TVs, monitors and other applications etc. For LD driver IC business, the group has launched its high-speed Peer-to-peer (P2P) display driver IC for the 165Hz high refresh rate gaming monitor and 8K TV during the period under review. We will continue with its marketing plans to promote the higher functionality display IC for this segment.
We are well-positioned to capture the vast opportunities presented by the evolving market landscape and thriving demand. We aspire to enlarge our market share and maintain the position as one of the world’s leading semiconductor players with global influence. Given the uncertainty in the semiconductor industry due to the insufficient capacity of wafers, the group has to face various challenges in the coming years. It is expected that the prices of display ICs will continue to increase in 2021 and beyond as more companies are rushing to obtain supply from the fabs to allow undisrupted production.
To overcome the shortcoming of increasing price, the group will aspire to enhance product quality and development. The rapid growth of the market demand is being fueled by demand from PMOLED wearables, smart home solutions, and IoT/AIoT solutions, thanks to the distinct features of enhanced display quality, bendability, and transparency. At the same time, consumers’ pursuit of product versatility and lightweight design is forcing brand owners to look for sophisticated IC solutions with unique features.
Moreover, mini-LED display has the potential to become the next-generation mainstream. The group is optimistic about the prospects of mini-LED display and is stepping up its research in offering the ultimate solution for mini-LED display driver applications with increasing resources to achieve technology breakthroughs.
Mr. Raymond Wang, the Chief Executive Officer of Solomon Systech (International) Limited, said, “We are pleased to see the encouraging interim results performance and the significant sales growth in the period under review. Our business structure and product mix have got mature and comprehensive on the ground of the great contribution of our staff. In the second half of 2021, in view of the strong demand of IC display products, the Group will continue to fulfill the orders to cope with the increasing demand from customers. The Group will also make effort on the product innovation to consolidate our leading market position in display businesses. Carrying the expectations and trust of consumers, shareholders, employees, and business partners, we will strive to achieve sustainable growth and ultimately maximize the returns to our shareholders.”