The main business operations of China’s largest display panel manufacturer faced challenges in the first half of the year, as rising memory chip prices dampened demand for consumer electronics products.
Revenue increased by 1.8% to CNY103.1 billion (approximately USD15.3 billion) for the six months ending June 30, compared to the previous year. However, income from display device sales declined by 3.2%, totaling CNY81.8 billion (around USD12.2 billion), according to the company’s latest financial report released on August 28. Net profit, on the other hand, grew significantly by 62%, reaching CNY5.2 billion (about USD780.2 million).
The Internet of Things (IoT) innovation segment saw revenue grow by 5.8% to CNY19 billion. Revenue from the smart healthcare and engineering divisions also increased, rising 4.3% to CNY957 million. Additionally, sales in mini- and micro-LED lighting and sensor segments surged 47% and 88%, respectively, totaling CNY6.4 billion and CNY420 million.
The company commented that, “In the supply chain, memory chip prices have risen sharply due to supply and demand imbalances, which increases the overall cost of end devices and continues to squeeze profit margins across the industry.” It added that the display industry is currently undergoing a period of structural adjustment. Fierce market competition and rapid technological updates are intensifying operational pressures for manufacturers.
Rising memory costs contributed to weakened demand for consumer electronics this year, resulting in lower panel prices and increased pressure on manufacturers, according to Li Yaqin, general manager of a market research firm. She predicted that the display panel industry will likely remain under stress through the second half of the year. Success for manufacturers will depend largely on their ability to advance in emerging sectors such as advanced packaging, Micro LED, and organic LED technologies.
Shares of the company climbed 1.5% to CNY6.01 (approximately USD0.89) in Shenzhen today.