Telecom equipment maker Sercomm Corp (中磊) yesterday posted 30 percent annual growth in net income for last quarter as its strategy of building deeper partnerships with telecom operators bore fruit.
Net profit jumped to NT$180 million (US$5.71 million), compared with NT$138 million a year earlier. That translated into earnings per share of NT$0.73, up from NT$0.56.
Gross margin improved to 17.7 percent from 13 percent a year earlier, thanks to robust demand for higher-margin products, such as small cell base stations, enterprise network equipment and mobile Internet-of-Things devices.
In the first half of this year, revenue from telecom operators contributed about 60 percent to its total revenue of NT$13.18 billion, compared with about 47 percent last year.
Sercomm yesterday said it expects revenue to grow by a double-digit percentage sequentially in the second half of this year.
The company has secured a supply contract with Rakuten Mobile Inc to deploy small cell base stations. The Japanese company built a virtual network in suburban Tokyo in February.
“The second half certainly will be a better period than the first half,” Sercomm president James Wang (王煒) said yesterday. “The growth will be substantial.”
Sercomm is seeing increasing demand for its 4G-enabled small cell base stations as customers use them for 5G radio transmission during the early-stage 5G deployment.
The company started shipping products to clients in North America in June and last month, Wang said.
“We withheld broadband device shipments that were originally planned in the first half, because of the US-China trade dispute,” he said.
As Sercomm has ramped up production in a new fab in the Philippines, the company will be able to help customers mitigate costs pressure from US tariffs on Chinese products, he said.
“We cannot entirely count on shipments from China, which would make access to certain markets difficult,” Wang said.
Based on Sercomm’s allocation plan, its Suzhou plant in China would account for a smaller share — 60 percent of the company’s total production this year, compared with 90 percent last year, while its plants in Miaoli County’s Jhunan Township (竹南) and the Philippines would contribute 20 percent each.
Sercomm has doubled the Jhunan plant’s capacity to cope with customer demand and plans to build new manufacturing sites out of China next year to address rising emerging market demand, Wang said.