In recent years, Pegatron has actively invested in new businesses targeting high-value-added industries. Besides expanding its core automotive and AI servers sectors, the company's investment in contact lens manufacturer Pegavision continues to deliver stable high gross margins. Notably, Pegavision achieved six consecutive years of record revenue in 2024, with profits reaching historic highs and gross margins consistently exceeding 50%.
Pegatron and Kinsus established Pegavision in 2009. The company operates under its own brand and also undertakes OEM orders across Asian markets including China and Japan, as well as in Europe.
2025 outlook: Optimism with regional variations
At a recent investor conference on June 12, Pegavision expressed optimism that 2025 revenues will grow further compared to 2024, driven primarily by the Japanese and European markets. In Japan, shipments of both tinted and clear lenses are steadily increasing, while Europe is seeing the launch of short-term silicone hydrogel products. However, the outlook for the Chinese market remains cautious. Kinsus acknowledged significant exchange rate pressures due to the New Taiwan dollar appreciation, noting that currency fluctuations and conditions in China remain key uncertainties.
Pegavision reported that sales currently focus mainly on Asia and Taiwan, with Japan showing relatively stable performance, whereas China lags behind. The management team explained that although policy incentives exist in China's consumer market, they have not succeeded in reversing weak demand amid intense "involution" and fierce price competition.
Originally, expectations were high for strong sales due to China's 618 shopping festival, but as the event approached, no clear demand materialized. The momentum in China's consumer market remains unclear. Historically, the major sales peak occurs during the year-end Double Eleven shopping festival. Given the subdued buying activity for Double Eleven 2024, Pegavision maintains a conservative stance, forecasting limited growth for the full year.
Europe represents another key market where Pegavision is actively expanding. Although the current sales share is modest, improvements in product mix—such as increasing the proportion of daily disposable silicone hydrogel lenses—are helping to boost gross margins.
Pegavision is also developing its presence in the US market, with plans to obtain certification for silicone hydrogel lenses in the second half of 2025. The year 2025 will be critical for this expansion. However, ongoing uncertainty over US reciprocal tariffs poses risks; if tariff outcomes are unfavorable, it could hinder growth in the US and extend the timeline for market entry.
Brand vs. OEM business strategy
Currently, Pegavision's revenue split between branded products and OEM business stands at approximately 20% to 80%. While the company has focused on growing its own brand in recent years, progress has been slower than expected. On the OEM side, the top two clients account for about 40% of sales, indicating a relatively high client concentration. Pegavision is actively working to diversify its client base.
Management highlighted that silicone hydrogel materials for soft contact lenses are a crucial competitive advantage for Pegavision in capturing market share. They expect steady growth in silicone hydrogel product lines to help broaden their customer portfolio. Additionally, timely regulatory approvals across regions, such as the planned US certification in the second half of 2025, are vital to this strategy.
Differentiated market strategies: Japan vs. China
Contact lenses are essential consumer goods with rigid demand, but competition remains intense. Pegavision reiterated its strategic approach: in Japan, which values quality and reputation highly, the company focuses on exporting premium-priced products rather than engaging in price competition.
By contrast, pricing largely determines market share in China. Yet, Pegavision chooses not to participate in price battles, preferring to sacrifice some market share to protect gross margins. This long-term approach aims to maintain healthier fundamentals.
Manufacturing capacity and expansion plans
Pegavision currently manufactures around 100 million lenses per month, with plans to expand to 115 million monthly units in 2025. Capacity utilization is maintained at about 80% to preserve operational flexibility. Expansion efforts in 2025 will concentrate on the Daxi plant, which produces most silicone hydrogel products, and the Vietnam facility, intended to mitigate geopolitical risks. However, mass production at the Vietnam site is not expected until 2026. Total capital expenditure for the year is projected to reach NT$1.5 billion (approx. US$50.7 million).
Operationally, Pegavision posted revenue of NT$6.817 billion in 2024, up 0.4% year-over-year, with net profit after tax rising 10.5% to NT$1.83 billion, setting a new record. Earnings per share reached NT$23.47. However, first-quarter revenue declined 7.63% year-over-year to NT$1.593 billion, operating income fell 27.1% to NT$430 million, and gross margin decreased 11.8% to 55.1%.
Article edited by Jack Wu
