Anticipated Moderate Decrease in 2nd Half Revenue for E Ink
E Ink Holdings Reports Strong Q2 Performance, Cautious Outlook for Second Half of 2021
E Ink Holdings, the world's largest e-paper display supplier, has reported a peak in revenue for Q2 2021, marking a recovery from earlier disruptions. The company's second-quarter revenue reached NT$10.63 billion (US$354.81 million). This strong performance was driven by front-loading and the transition of models from monochrome to color screens in the e-reader and e-note markets.
However, expectations for Q3-Q4 2021 are cautiously optimistic but tempered by challenges such as US tariffs and uneven market sentiment. According to E Ink's chairman, Johnson Lee, the company's customers, including system integrators and retailers, are optimistic about the industry's growth trend. Yet, they express concerns about the additional costs imposed by US tariffs on components and final products, which may impact gross margins and pricing strategies.
The gross margin last quarter jumped to 60.3 percent due to a favorable product mix and improved operational efficiency. Earnings per share rose to NT$2.58 from NT$1.76 for the same period. Despite the positive results, the company expects a moderate revenue decline in the second half of the year.
In response to these challenges, E Ink is making strategic investments. The company is considering building a pilot production line in the US as part of its increasing investments in the region. Additionally, E Ink is investing in its research-and-development team in San Jose, California.
The new production line, H5, is expected to enter volume production this month or next month after a delay early this year due to technology bottlenecks. However, the company's production lines are currently fully utilized, making it difficult to meet demand.
Lee stated that E Ink's order intake might weaken in the fourth quarter but expects an improvement in the first quarter next year. The fourth quarter is a low season for the electronic shelf label (ESL) business, but customers are positive about ESL adoption in the long term.
Despite the cautious outlook, the first seven months of 2021 have seen a 38.43 percent annual increase in E Ink's revenue, with the company reporting a net profit of NT$2.97 billion in Q2, a 47 percent growth from the same period last year.
The market sentiment is cautious, with people adopting a wait-and-see attitude, particularly regarding consumer spending. Despite these uncertainties, E Ink remains optimistic about its future and the growth of the e-paper display industry.
- E Ink Holdings, in addition to its strategic investments, is also focusing on technology advancements, as evidenced by their plans to establish a pilot production line in the US and increase investments in their research-and-development team in San Jose, California.
- Despite the challenges posed by US tariffs and uneven market sentiment, E Ink's chairman, Johnson Lee, remains optimistic about the future, especially the growth of the e-paper display industry, recognizing the potential for long-term adoption of electronic shelf labels (ESL).
