FocalTech Systems Co (敦泰電子) yesterday reported a fourth consecutive loss for last quarter due to sluggish demand from smartphone vendors and protracted capacity constraints.

Clients were also capricious about placing orders over the past six months as the US-China trade dispute weighed on market sentiment and affected consumers’ willingness to spend, the touchpanel controller designer said.

“Orders from Huawei Technologies Co (華為) have been going up and down, but they have been up recently,” FocalTech chairman Genda Hu (胡正大) told investors in Taipei. “We believe that the third quarter will see growth.”

Third-quarter revenue is expected to grow by a single-digit percentage from last quarter’s NT$2.14 billion (US$68.15 million), helping it return to profitability, the Hsinchu-based firm said.

FocalTech last quarter started accepting new orders for its integrated driver and controller (IDC) chips as it solved wafer capacity constraints that had depressed its shipment growth over the past four quarters, Hu said.

“IDC shipments will grow significantly in the second half, compared with the first half,” Hu said.

FocalTech’s chips have been used in customers’ new products, including Huawei’s MateBook 14, Xiaomi Corp’s (小米) CC9 smartphone and Oppo Mobile Telecommunications Corp’s (歐珀) Realme phones, he said.

Major growth drivers for this and the coming quarters would include new touch sensors and driver ICs used in advanced AMOLED panels for smartphones, he added.

The Chinese-language Commercial Times earlier this year reported that FocalTech had landed orders from Samsung Electronics Co to supply touch sensors and driver ICs used in AMOLED panels.

The company has declined to confirm the report, but Hu yesterday said: “We have penetrated into Chinese [AMOLED] manufacturers.”

Samsung is the world’s biggest AMOLED supplier, but some Chinese panel makers are starting to produce the advanced panels, such as BOE Technology Group (京東方), he said.

FocalTech’s losses narrowed to NT$135 million last quarter, compared with losses of NT$194 million in the first quarter. The company earned NT$80 million in the second quarter last year.

Gross margin improved to 22.92 percent, compared with 20.96 percent in the previous quarter and 21.6 percent a year earlier.

To minimize operating risks, FocalTech said it is diversifying to non-smartphone segments, including industrial, smart home and automotive devices, while its chips are used in smart speakers by some Chinese brands, including Xiaomi.