E-paper solution provider E Ink Holdings (EIH) is optimistic about its business prospects for 2021 but gross margin is expected to trend down in the quarters ahead after hitting a high of 49.87% in the first quarter of 2021, according to company chairman Johnson Lee.
The first-quarter gross margin represented a significant improvement from the 45.71% seen in the previous quarter due to an improvement in product mix, Lee said.
However, the high gross margin will be eroded by price increases for some critical parts and components, including driver ICs, TFT backplanes and other parts, Lee noted.
The company's strategy is not to pass the increased costs on to clients, as the e-paper industry is still in the nascent stage of expansion, Lee stressed.
Due to increasing demand, EIH will add four new production lines in 2021, mainly for ramping up its output of e-paper materials and modules, Lee said, noting that part of the new production facilities will come online before the end of this year.
The company's production capacity for 2021 has been fully booked, Lee stated, adding that clients are now discussing capacity support for 2022.
The company has revised its capex budget for 2021 to NT$2 billion (US$72 million), up from the NT$1.5 billion set previously.
EIH also saw its net profit hike 52% sequentially and 4% on year to hit an eight-year high of NT$1.167 billion in the first quarter of 2021. EPS for the quarter stood at NT$1.03 compared to NT$0.69 a year earlier.
