Maintained a Steady Growth Momentum with Revenue Up 13.5% Mobile Display and Mobile Touch ICs Delivered Outstanding Performance

Financial Highlights:

• Sales revenue increased by 13.5% to US$ 190.8 million
• Gross profit was US$ 65.5 million with a 34.3% gross margin
• Profit attributable to owners of the parent increased by 16.8% to US$ 27.8 million
• Shipment volume reached 312.9 million units in 2022
• Earnings per share increased by 10% to 1.1 US cents (Equivalent to HK 8.6 cents)

HONG KONG SAR - Media OutReach - 23 March 2023 - Solomon Systech (International) Limited ("Solomon Systech" or the "Company''; Stock Code: 2878) announced its annual results of the Company and its subsidiaries (collectively, the "Group") for the year ended 31 December 2022 (the "Year").
In 2022, the recovery of global economic activities was challenging. Suffering from a slowdown in demand for consumer electronics in the second half of the Year, the semiconductor industry entered a destocking phase. The Group maintained a steady growth momentum by leveraging its pioneering technologies and timely adjusting operating strategies. With the outstanding performance of New Display ICs as well as Mobile Display and Mobile Touch ICs, the Group's sales revenue reached US$190.8 million, representing a year-on-year increase of 13.5%. The profit attributable to owners of the parent during the Year increased by 16.8% to US$27.8 million. Benefiting from the stable market demand for the Group's products, the shipment volume for the Year reached 312.9 million units. Earnings per share were 1.1 US cents, representing an increase of 10% over that in 2021. The Board resolved not to declare any final dividend for the year ended 31 December 2022.
The provision for obsolete inventory in 2022 was approximately US$ 12 million, resulting in a decrease of 5.7 percentage points in gross margin to 34.3% for the Year. In response to the change of market environment, the Group adjusted the average selling price of some products in 2022 to maintain its competitiveness. The Group will continue to boost its competitive edges and maintain a reasonable profit by ensuring its stable supply chain, stringent inventory control and product innovation.
Business Review
New Display ICs
During the Year under review, New Display IC products showed a steady growth in both sales revenue and shipment quantity, maintaining the Group's leading position and pioneering technologies in the New Display IC sector. The Group's sales of Electronic Shelf Labels (ESL) in the European and North American markets remained stable as ESL has become more and more prevalent. The Group's customers include many of the world's top-ranked supermarkets. To further tap into the market of e-Signage and e-Reader applications, the Group commenced mass production of the AMEPD driver IC for Advanced Colour e-Paper (ACeP) products in 2022. Moreover, the Group is committed to expanding the application of IC products to other areas, such as translators and large retail signage applications.
OLED Display ICs
The Group is the world's number one PMOLED display driver IC player with a dominant market share in terms of unit of shipment in 2022. Furthermore, the Group's mini-LED DDI solutions for 50-inch to 100-inch indoor signage display have been in mass production since 2018 and are widely used in the curved signage display in the underground and subways in the United Kingdom and the United States. As the global high-end consumer electronics market continues to expand, the orders for mini/micro-LED IC products grew during the Year as compared to that in 2021.
Mobile Display and Mobile Touch ICs
Benefiting from the robust growth in demand for game console controller ICs, the Mobile Display and Mobile Touch ICs products reported a 55.4% increase in sales revenue. During the Year, the Group continued to expand its product portfolio, including In-Cell Touch Display Driver IC, TFT Display Driver IC, STN Display Driver IC, MIPI Bridge IC and Display Controller IC, which widely support industrial and consumer applications spanning smartphones, tablets, wearables, gaming devices and IoT devices.
Large Display ICs
During the Year, the market of large screens was affected by the COVID-19 pandemic, which led to sluggish demand. Panel manufacturers suffered losses against the backdrop of high inventory. Thus, the sales performance of the Group's large display IC business segment was not satisfactory. However, the Group was able to launch the successful mass production of driver ICs for the 165Hz high-refresh-rate gaming monitor of 27/23.8 inches and 43-inch smart HDTV with the panel makers and the international brands, satisfying the needs of the high-end entertainment market.
New Technology and Product Highlights
With the increasingly fierce technology competition in the world, it is extremely important to achieve independent innovation and improve R&D capabilities. The Group supported E Ink in developing the Display IC Solutions for Spectra™ 3100, a next-generation specialised platform for ESL and retail signage application, in 2021. This is a significant technological break-through that enables a four colour spectrum display. Spectra™ 3100 is expected to be launched in 2023, enabling a high growth potential for the Group's New Display IC business in the future.
In addition, the Group expects to launch the world's first PM-MicroLED Display Driver SSD2363 in 2023, which can be applied to next-generation high-brightness displays of three inches or less for wearable devices, home appliances and industrial appliances. The Group will further promote this product to first-tier customers to increase possible applications.
Riding on the highly sought after high-end game console controllers by consumers, the Group strives to provide players with a smooth gaming experience through game console controller ICs. Besides, the Group will focus on forward-looking development of AR and VR fields to capture the opportunities of the Metaverse aggressively by leveraging its capabilities in high-speed and high-resolution display IC technology.
Outlook and Strategies
The semiconductor industry is experiencing the rebound effect caused by the overheating of the electronics industry in the past two years, and the slow pace of development is inevitable in the short term. However, there will be more opportunities for cooperation with downstream to develop products in the second half of 2023 as the epidemic winds down in the mainland China. While supply chain problems have been eased with the removal of pandemic travel restrictions, chips are no longer scarce, however, raw material costs remain under rising price pressure.
Looking ahead, Mr. Wang Wah Chi, Raymond, Chief Executive Officer of Solomon Systech said, "In the second half of 2022, the semiconductor industry entered a destocking phase. It may need to go through a period for a normalised supply-demand balance. The future will be more volatile and uncertain than ever before, yet we believe we are facing opportunities and challenges at the same time, through our deep experience in the industry. The Group will make concerted efforts to strive for excellence, by formulating long term development strategies as well as empowering our R&D capabilities and technical level, aiming to unlock the value and potential of our business. We will strive to control costs, continue to focus on developing technology, improve product portfolio and endeavor to develop high value-added products, resulting in higher effectiveness and resilience of the operation. Looking forward to the gradual recovery of the global economy and the tremendous opportunities brought about by a new era of technology, the Group aims to achieve an ideal and sustainable business growth, creating fruitful returns to our shareholders."
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