Solomon Systech Returns to Profitability

Sales Up Substantially by 23% to US$33.4 Million

Financial Highlights:

 

	For the six months ended 30 June
	2015		2014		Change
	US$’ m	HK$’ m equivalent	US$’ m	HK$’ m equivalent
Sales	33.4	258.7	27.3	211.2	+23%
Gross Profit	12.0	92.9	9.3	72.4	+28%
Gross Margin	35.9%		34.3%		+1.6pts
Net Profit / (loss)	0.9	6.7	(1.5)	(11.4)
Earnings / (loss) per share	0.03 US cent	0.27 HK cent	(0.06) US cent	(0.46) HK cent
Book-to-bill Ratio	1.13		1.09

 

(Hong Kong – 18 August 2015) – Solomon Systech (International) Limited (“Solomon Systech” or “the Group”; SEHK: 2878) announced today its 2015 interim results for the six months ended 30 June 2015 (“1H 2015”). The Group achieved a net profit of US$0.9 million, with a 23% rise in sales to US$33.4 million and a substantial increase of 87% in total shipments to 82.7 million units year-on-year. It is also worthy to note that the book-to-bill ratio for 1H 2015 was 1.13, indicating that demand has outpaced supply, and the sales backlog would be carried over to the rest of 2015.

 

The strong increase of the Group’s total shipments during the period under review was contributed by an increase in shipments of its PMOLED display driver ICs which have capitalized on the fast-growing wearables market to drive growth, and also large TFT display driver ICs, which, with a strengthened product portfolio, managed to capture the demand of the Group’s major customer.

 

Dr. Humphrey Leung, Chairman and Group CEO, said, “We are pleased that the Group achieved a turnaround during the review period. Our strategies of strengthening the product and application portfolios; and also enhancing the new product introduction procedures, together with our efforts in capturing the high-growth, high volume market segments have been proven fruitful in driving growth.”

 

Business Review

 

In 1H 2015, the total unit shipments of Advanced Display products recorded a strong increase of 97% year-on-year to 57.2 million units (1H 2014: 28.9 million units), mainly attributed to the success of the Group’s PMOLED products in capturing the rapidly growing wearables market, in particular high brightness displays for healthcare and fitness applications.

 

The Group has further extended the product portfolio of its segment-type EPD solutions to cater to wearable health and fitness devices, and has also been developing color (red/white/black) EPD solutions and new AMEPD solutions supporting higher resolution and larger panel sizes to capture the rising demand. In addition, the Group has made good progress in developing other new products, such as AMOLED display driver IC and OLED lighting driver controller IC.

 

For the Mobile Display business, its In-Cell touch TFT LCD display driver IC supporting FWVGA panels has been designed-in a smartphone project with a leading smartphone manufacturer. The Group has also developed new TFT LCD display driver ICs for metal oxide panels supporting FHD display panels targeting China smartphone market, and QHD panels targeting tablet applications.

 

For the Mobile System business unit, the Group has achieved design wins for its Out-Cell touch panel controller ICs for world renowned brands’ tablets. The Group has also designed-in its new In-Cell and On-Cell touch panel controller ICs within leading smartphone panel manufacturers. Its MIPI high speed display interface controller ICs have scored a number of design wins, including a leading wristband brand, education tablets and industrial panels for low-tier CPUs. The Group has also successfully designed-in within market-leading application processor platforms for high-resolution media tablets, as well as dual display smart devices.

 

Last but not least, for the Large Display business unit, the total unit shipments soared by 223% year-on-year to 17.0 million units (1H 2014: 5.3 million units). The Group managed to achieve this substantial increase in shipments as it has successfully produced new products to fit the demand of its major customer, in particular large TFT display driver ICs for HD and FHD monitors as well as HDTVs. The Group has started mass production of new TFT driver ICs for QHD monitors, and qualification of its new products for HD TVs and FHD VA monitors. To meet the needs of its key customer’s increased capacity, the Group has also started to develop new ICs for 4K2K TVs and FHD notebooks.

 

Prospects

 

Ready for Enhanced Business Growth and Performance

 

The Group will leverage the burgeoning wearables market to ramp up shipments, in particular for PMOLED display driver ICs and MIPI display interface controller ICs. It will also explore the potential of Out-Cell touch panel controller ICs in the wearable wristband market. More new products for wearables will be launched to address the growing trends of larger display size, enhanced features and power efficiency, higher resolution, DPI and brightness as well as component miniaturization.

 

For smartphones and tablets, the Group targets to start pilot production of a number of new display driver ICs for smartphone applications, including the In-Cell touch TFT LCD display driver IC as well as TFT LCD display driver ICs for FHD and QHD metal oxide panels. The Group’s Out-Cell touch panel controller IC for the various tablet applications has been scheduled for mass production.

 

For smart TVs and monitors, the Group aims to maintain the growth momentum of its large TFT display driver ICs in the 2H, in particular for applications including HD, FHD and QHD monitors, as well as HD TVs. It will start mass production of its new TFT display driver ICs for HD TVs and FHD VA monitors. The Group will also continue to develop new ICs to capitalize on the increased capacity of its key customer and further increase its share of the LCD business of its major customer.

 

Dr. Leung concluded, “Looking ahead, although the major applications driving semiconductor business is anticipated to be weaker than expected, we are grateful that our key application segments, in particular wearables, are seeing strong growth trends and our key customer is increasing production capacity of panels for TVs, monitors and smartphones. To ensure we could well capture these growth opportunities, we shall secure adequate manufacturing capacity, continue to develop more new products timely, and increase the product adoption rate and product penetration. We are ready for enhanced business growth and performance”.