Amid aggressive price competition in the display industry, EDT has developed several high-value-added products, which are now beginning to yield results. The company estimates that revenue distribution for 2024 will be balanced between the first and second halves, at a ratio of 1:1.
However, EDT anticipates several challenges in 2025 due to fluctuations in smart home orders, with a primary focus on improving profit margins, where high-value-added products might make a more significant contribution.
Product portfolio and market distribution
EDT's main products include small to medium-sized LCD displays and capacitive touch panels (CTPs), with production facilities located in Kaohsiung, accounting for 90% of total capacity, while the factory in Dongguan, China, contributes about 10%. Revenue from European and American clients makes up 80% of the total, with Germany being the largest market.
In terms of revenue itemized by product type, the company's TFT and CTP combined make up approximately 54%, TFT alone accounts for 25%, STN represents 12%, CTP is at 1%, and high-value-added products comprise 7%, with the remaining 1% being other products.
High-value-added products are mainly embedded systems as well as software solutions integrated with hardware. As panel sizes increase, leading to higher product prices, profit margins are expected to improve.
Regarding individual revenue by product type, smart home products accounted for 35% of revenue in the first half of the year, primarily driven by high-end kitchen series and smart home industrial control systems. Industrial control products contributed around 33%, which, as the basic source of revenue, has the characteristics of long-term orders, variety in production, and extended life cycles. Medical products made up 17%, up from 9% in the same period in 2023, and are expected to continue growing due to their long life cycle, price stability, and highest profit margins, with the primary market in the US.
Automotive revenue accounted for about 7%, focusing on niche applications such as beach and snow vehicles. EDT indicated that while there are numerous automotive design projects, the electric vehicle market, particularly in Europe, is experiencing a slowdown, and they are awaiting a market recovery.
Commercial and office products make up about 3%, while other products, mainly military applications, account for approximately 5%. Due to the impact of the US-China trade war, clients from Europe or the US are showing increasing interest, and the high entry barriers lead to higher profit margins.
Industry challenges and transformation strategies
EDT noted that the display industry is currently dominated by China, despite the country facing both internal and external pressures. As a result, price competition in the touch display sector is becoming increasingly common.
Years of increasing supply without a corresponding rise in demand have created an imbalance in the market. According to DSCC data, the panel production area in 2024 is estimated to reach 380 million square meters, while the demand area is around 270 million square meters, indicating that supply exceeds demand by approximately 30%.
The oversupply has intensified market price competition, and as technology matures, barriers to entry into the market are lowered. In addition, ongoing trade tensions between the US and China are increasing external challenges, prompting the industry to undergo transformation.
Taiwan's transformation strategy focuses on the simultaneous pursuit of differentiation and cost reduction, particularly in the medical and military sectors. They believe that market boundaries and industry structures can be adjusted according to broader environmental changes. Thus, they aim to transition into solution service providers while continuously improving the functions of touch displays.
Building on their touch display foundation, EDT is incorporating new materials and processes, including plastics and metals, various sensors, and combining software, firmware, and hardware development.
This integration enhances traditional displays, which only provide unidirectional information, by incorporating advanced touch technology and UI design, resulting in high-value-added products such as medical monitors, outdoor sports equipment, snowmobiles, electric-assisted bicycles, charging stations with NFC functionality, and multifunctional bathroom controllers.
Future outlook and revenue projections
EDT reported that new products contributed approximately NT$10 million (approx. US$310,000) in revenue in 2023, with hopes to reach NT$20 million by 2025. They estimate that operations in 2024 will maintain a 1:1 ratio between the first and second halves, though the latter may experience variability, largely dependent on clients' inventory adjustments at year-end.
Regarding revenue performance in 2025, EDT anticipates that the share of smart home revenue will decline, while medical products are expected to rise. Industrial control will maintain the level from 2024. Due to fluctuations in smart home orders, which represent a significant revenue share, the growth of overall revenue in 2025 may face considerable challenges, primarily relying on contributions from new products.
Although there might be challenges in revenue, medical products have the highest profit margins, followed by industrial control products, making profit margin improvement the operational focus for 2025.
EDT engages directly with customers in the US and South Korea, while distributors primarily focus on Europe and Japan. Currently, direct customers account for about 60-70%, with distributors making up approximately 30-40%. Europe-based distributors are continually adjusting their inventories, and improvements in inventory situations are anticipated by the end of 2024.
Article translated by Heidi Tai
