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May 29, 2017

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IC firms expect good sales in the first quarter on rising China smartphone sales

TAIPEI, Taiwan -- As demand for smartphones continues to rise in mainland China, local manufacturers specializing in display driver IC production, such as Novatek Microelectronics (聯詠), Qrise Tech (旭曜), Ili Technology (奕力) and Sitronix Technology (矽創), are expected to benefit from this growth momentum in the first quarter.

The smartphone market in mainland China is expanding quickly. Local smartphone makers ZTE, Huawei and Lenovo have broken into overseas markets and achieved good results. Firms that produce display driver ICs regard China's smartphone market as a crucial one due to its immense size.

As Chinese manufacturers began to stock their inventory with new products and display driver IC goes after higher resolutions, analysts forecast that Taiwanese IC firms will have strong sales in the first quarter, a period which is usually considered an off-season.

Qrise Tech said that demand for mid- and high-end display driver ICs comprise a larger portion of product demand, and they expect sales in the first quarter to level those in the fourth quarter of last year. Novatek general manager Steve Wang (王守仁) agreed with the statement, saying that the company has seen higher shipment for high-end products.

Ili Technology initially forecast sales to slow in the first quarter and drop by 10 percent, as it was traditionally considered an off-season and had fewer working days. However, with demand for smartphones rising fast in mainland China, the company says that sales in the first quarter may level with those in the fourth quarter last year.

Apart from the other three companies that supply for smartphones, Sitronix Technology focuses on providing display driver ICs for traditional cell phones. The company forecast a 5- to 10-percent quarterly drop, which however, is lower than the average in the past. The reason is that there is still a stable demand for traditional cellphones in mainland China, the company said.

All in all, most IC firms expect sales in the first quarter to level or dip slightly compared with the last quarter, except for Qrise Tech, which is optimistic that sales may outperform those in the last quarter.

Institutional investors forecast that Qrise Tech will have a profit margin between 14 to 15 percent in the first quarter. With high demand for higher resolution ICs, investors said sales in February will surpass those in January by 5 percent, and sales in March will grow as well.

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