Largan November sales hit 2nd highest level this year

Taipei, Dec. 5 (CNA) Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., reported its second highest monthly sales this year in November, up about 2 percent from a month earlier, with market analysts attributing the growth to the launch of the new iPhone 12 models in October.

In a statement, Largan said it posted NT$5.24 billion (US$184 million) in consolidated sales in November, the 2nd highest this year after NT$5.44 billion in March, and up 2 percent from NT$5.14 billion seen in October.

However, November sales were down 21 percent from a year earlier, and analysts said the decline largely reflected a loss of orders from China's smartphone brand Huawei Technologies Inc., which faced sanctions imposed by the United States in mid-September.

Largan said although its clients have brought new products to market, the COVID-19 pandemic has still impacted the global market, prompting some clients to cut orders, which resulted in the moderate month-on-month sales increase in November despite the presence of the latest iPhones.

Analysts added that the global smartphone market has been impacted by the spread of the virus, prompting investors to buy more affordable low-to-mid end models instead of high-end models in which Largan has a lead over its peers in technology development.

In such circumstances, Largan said peak season effects for the current fourth quarter could be weaker than in past years, forecasting sales for December will be little changed from a month earlier.

In November, lenses of 20 megapixels and over, which have a higher profit margin, accounted for 10-20 percent of Largan's total sales, while 10-20 megapixel lenses made up 60-70 percent, and 8-10 megapixel lenses represented up to 10 percent, the company said.

In the first 11 months of this year, Largan's consolidated sales totaled NT$51.04 billion, down about 8 percent from a year earlier.

Judging from Largan's cautious assessment of its December sales, analysts said the company could see sales for 2020 fall from 2019, when revenue stood at NT$60.75 billion, up 22 percent from a year earlier.

Despite a slowdown in smartphone shipments amid COVID-19 and the impact of sanctions imposed on Huawei in 2020, Largan continues to pursue a production expansion plan for its longer term development.

In November, Largan announced it is investing about NT$6.06 billion to build two production sites, both in Taichung, central Taiwan, where it is headquartered.

Construction work on the two new sites is scheduled to be completed in 2024, Largan said.

Ahead of the November announcement, Largan said in late January that it would invest NT$1.66 billion to build a plant also in Taichung, with construction slated to be completed in 2023.