Shares of Tianma Microelectronics and Visionox Technology plummeted after the two leading Chinese small panel suppliers forecasted losses in the first half of the year, primarily due to soaring memory chip prices negatively impacting smartphone sales.
Tianma’s stock closed down by 5.22% at 6.72 yuan ($0.99) in Shenzhen today. Visionox hit its trading limit, falling by 10% to 6.70 yuan.
Tianma projects a loss of between 720 million and 750 million yuan ($106.4 million to $110.8 million) for the six months ending June 30, a significant drop from a net profit of 105.9 million yuan a year earlier, the company announced yesterday.
Meanwhile, Suzhou-based Visionox forecasted its first-half net loss to have widened by 32% to 86%, reaching between 1.4 billion and 2 billion yuan ($206.8 million to $295.5 million) compared to the same period last year.
The shortage of memory chips, driven by surging demand from the artificial intelligence sector, has limited supply, affecting downstream markets such as intelligent terminals and organic light-emitting diode (OLED) displays, Visionox added.
Tianma echoed these concerns, attributing its losses to the same factors. It noted that rising memory prices especially impacted its active-matrix OLED business. Its automotive and professional display divisions, which account for over 55% of revenue, maintained steady profitability, partially offsetting the adverse effects.
Smartphone manufacturers have generally responded by raising prices or modifying product configurations in an effort to cope with increasing memory costs. According to a recent report, these adjustments have dampened consumer purchasing willingness.
China’s smartphone shipments declined by 4% year-over-year to 66 million units in the second quarter, marking the fifth consecutive quarter of declines, according to IDC. Globally, smartphone shipments dropped 7% to 277.5 million units during the same period, continuing a two-quarter downward trend.
In contrast, larger panel manufacturers in China are projecting robust performances for the first half. Industry leader BOE Technology Group recently stated it expects net profits to have surged by 54% to 69%, reaching between 5 billion and 5.5 billion yuan ($740 million to $810 million) year-over-year.