Advantech Deploys 2030 Vision in Full Force with Multiple Growth Engines and Orchestration Model
3/6/2024
Advantech (TWSE: 2395), a global leader in industrial IoT, is hosting an investor conference today (March 6), presided over by Chairman KC Liu alongside three co-presidents – Mr. Eric Chen, Ms. Linda Tsai, and Mr. Miller Chang. Although Advantech’s 2023 revenue dropped 6%, its profitability was still effectively maintained, with net profit for the year at a historic high. The 2023 gross margin hit 40.5%, the operating profit amounted to NT$12.128 billion (operating margin of 18.8%), and the consolidated net income after tax totaled NT$10.838 billion (net profit margin of 16.7%), while 2023 annual EPS reached NT$12.65. Meanwhile, Advantech proposed a cash dividend per share of NT$9.5 based on a 75% dividend payout policy. The dividend proposal was approved by the Board of Directors last week and is subject to final approval by the 2024 annual shareholders meeting.
Eric Chen, President of General Management and CFO stated, “Looking forward to 2024, Advantech remains prudently optimistic. The overall BB ratio has shown a sign of gradual recovery, indicating regional markets have basically bottomed out. The 1Q24 revenues are projected within the $440 million USD to $460 million USD range, the gross margin will be in the range of 39% to 41%, and the operating profit margin will be in the range of 14% to 16%.”
Heading to Next Transformation through AI and Multiple Growth Engines
According to Miller Chang, President of Advantech’s Embedded IoT Group, the incorporation of artificial intelligence (AI) technology and sustainable net-zero applications will drive a new wave of industrial revolution, propelling the AI of things (AIoT) into a phase of exponential growth. Advantech will nurture areas of AIoT and edge computing in hopes of maintaining robust growth momentum and leadership in the industry. For this reason, the company has officially launched an organizational transformation, sparing no effort in deploying its 2030 Vision. As part of our overall development, Advantech will retain its Sector-Driven strategic approach, in which future growth momentum is focused on not only core business activities but also developing emerging businesses, as well as strategic investments and M&A. The company will thus strengthen its core competencies accordingly and ramp up talent development efforts to embrace the new business development model.
Linda Tsai, President of Advantech’s Industrial-IoT Group, emphasizes that Advantech foresees the AIoT x ESG trends and as such has fully deployed its sector-driven strategy, focusing particularly on eight major sectors. The deployment will be made complete in the future through global strategic organization to nurture market sectors and enhance core competitiveness. The sectors at the center of Advantech’s attention include embedded KA-DMS, industrial edge solutions, and industrial automation. takes aim at the needs of major clients, providing deep technology services and customized product designs. Specifically, for North American and China markets, DMS services are expanded and improved, and directed at major clients; for Europe and Japan markets, we increased investments an Embedded KA-DMSd established an Engineer Design Center. Industrial edge solutions use AI, IoT, and edge computing as a stepping stone to our development in the areas of industrial and semiconductor equipment, new energy equipment, and new infrastructure. Industrial automation aims to deepen customer relations with a focus on smart factories, energy, and ESG solutions to establish a solid co-creation ecosystem.
Leveraging the Synergy of Orchestration to Preserve the Economic Moat Advantage
Chairman KC Liu takes pride in Advantech’s ability to maintain its economic moat, which is attributed to the three key components of the company’s strategic framework – platform, orchestration, and sector. Advantech’s vision for the next decade of its development is to combine the existing product group AIoT + Edge computing hardware platform and the WISE-IoT software platform, which is reaching maturity following eight years of development, and together with its industrial AI solutions and business knowledge, to create an “orchestrator” business model for industrial integration application.
In terms of hardware platforms, Advantech has amassed a multitude of mature products over the past decades since its establishment and will continue to engage in innovation to become an all-encompassing supplier of edge computing. In the uppermost layer of the framework, sector refers to the sectors in the application market that Advantech will target to develop services for equipment manufacturers and system integrators in those sectors. In the middle layer, orchestration represents the orchestrator role that Advantech’s WISE-IoT and EdgeSync 360 software platforms will play in each sector to help clients quickly complete AIoT development projects with minimal R&D efforts.
The next decade is projected to be the optimal time for the vigorous development of AI, IoT, and edge computing in various sectors. Advantech will adopt the sector-driven approach and orchestration concepts to embrace new opportunities from AIoT and edge computing, thereby realizing our long-term vision of “Enabling an Intelligent Planet.” Although this business model is more complex and requires a longer time to accumulate results, it is expected to bring about “sustainable development” and a "wide economic moat," providing long-term contributions to both shareholders and society.
