VIS held a law conference today, and the released data showed that the revenue in the fourth quarter continued to decrease to less than NT $10 billion, but the gross profit margin of 39% - 41% was still maintained compared with 45% in the third quarter. Huang Huilan, Deputy General Manager and Chief Financial Officer of VIS, pointed out that the company was mainly worried about excessive inventory adjustment of customers, and obtained customers' consent that about 20% of the production capacity was used to build inventory in advance, which led to a small decrease in gross profit margin.

According to Taiwan's Economic Daily, due to weak demand in the consumer electronics terminal market in the third quarter and customers' active inventory adjustment, VIS orders declined, and the capacity utilization rate also dropped to 81% - 83%. According to VIS statistics, in the past, every 10% reduction in capacity utilization still affected 0.4% - 0.45% of gross profit margin. At present, this data is still maintained. However, each customer has different needs and strategies, including advance payment, advance stock and other different ways.

The general strategy of the chairman and general manager of VIS mentioned that the company's LTA contract looks at the long term. At present, between the industrial inventory adjustment and the inventory establishment, some customers' demand still exceeds the company's capacity expansion. For example, the current adjustment in the supply chain will still pose a big challenge in the first half of 2023, but the construction of new capacity still takes time. In addition to the new capacity, the company will continue to repair the energy production within the control range. The company initially sees that the new capacity expansion has decreased from the original estimate of 20000 pieces to 1.5 pieces, mainly because there is still a long contract to be expanded, and if it can be revised down, it will be revised down, so it remains prudent.

So far this year, the adjustment of panel supply chain has the greatest impact on driving IC business. Recent industry survey data shows that power management IC (PMIC) orders have weakened rapidly since June, and power discrete components are the only business that remains unchanged.

The general strategy points out that the overall production capacity in the past three years has been in short supply. Under the strategy of customer service priority, the oversupply has eased. In addition to long-term contract and long-term cooperation customers including display driver chips (DDIC), there is still capacity space exposed. However, new opportunities have emerged due to geopolitical conflicts, supply chain transfer and other factors, and the automotive industry has also grown rapidly and stably.