Although Advantech saw an unprecedented drop in revenue in 2023, improved gross margins meant that the company set a new high in net profit, furthering its push toward transformation. Advantech, through internal adjustments to its business, is on tra...
Although Advantech saw an unprecedented drop in revenue in 2023, improved gross margins meant that the company set a new high in net profit, furthering its push toward transformation. Advantech, through internal adjustments to its business, is on track to reach US$5 billion in revenue by 2030, says chairman KC Liu.
For 2023, Advantech saw revenue drop by 6%, but a 40.5% gross margin led to an operating profit of NT$12.128 billion (US$385 million). Net income after tax reached NT$10.838 billion (US$344 million), while earnings per share (EPS) in 2023 reached NT$12.65 (US$0.40).
Looking ahead to 2024, President of General Management and CFO Eric Chen notes challenges in the general economy for the first half of 2024. However, gradually improving book-to-bill ratios signal that most regional markets have already bottomed out. For the first quarter of 2024, revenue is projected to be between US$440–460 million, gross margin at 39–41%, and operating margin at 14–16%. With several projects entering the shipment phase later in the year, the company forecasts an optimistic annual performance.
KC Liu notes that 2023 marked Advantech's 40th anniversary, yet the substantial drop in revenue showed that the company has issues in addition to a weak general economy. The company's previous strategy, in which new hardware divisions were continuously added to chase niche markets, is now showing signs of age. New methods will be required to embrace the age of AI, edge computing, and Internet of Things (IoT).
Advantech's upcoming strategy will comprise three key dimensions: platform, orchestration, and sector. In Liu's words, Advantech's vision for the upcoming decade is for a collaborative business model that integrates its AIoT and edge computing hardware businesses; its industrial WISE-IoT platform, now in its eighth year; and industrial AI solutions and know-how.
In terms of hardware platforms, Advantech can leverage decades of mature products to emerge as a comprehensive supplier of edge computing equipment. At the sector level, the company will target specific applications and form close relationships with manufacturers and system integrators in these markets. Orchestration will cover the collaborative functions of Advantech's WISE-IoT and EdgeSync360, allowing the company's two major software platforms to facilitate the development of AIoT applications.
In Liu's opinion, the next decade will see rapid developments as AI, IoT, and edge computing become widespread across industries, and Advantech will build upon its collaborative operational model to seize market opportunities in AIoT and edge computing, in accordance with the company's long-term vision of "enabling an intelligent planet." Although this will take longer to bear fruit, Liu expects this to lead to sustained development that will help build a high economic moat in the long run.