Advantech Strives for Sector Driven Innovation and Growth with New Business in Artificial Intelligence and Sustainability
8/2/2023
Advantech (TWSE: 2395), a global leader in industrial IoT, is hosting an investor conference today (August 2nd), presided over by Chairman KC Liu alongside three co-presidents – Mr. Eric Chen, Ms. Linda Tsai, and Mr. Miller Chang.
Advantech’s revenue and profits for the first half of 2023 have set a new company record for the same period of time, with YoY growth at 4% and 19%, respectively. The gross margin hit at 40.5%, the operating profit amounted to NT$6.931 billion, and the consolidated net income after tax totaled NT$5.964 billion (net profit margin of 17.3%), while the EPS (earnings per share) reached NT$6.97 in 1H23.
Eric Chen, CFO and President of General Management stated, “Looking forward to the second half of 2023, global high inflation and China’s economic recovery remain uncertain. With new orders significantly slowdown, the 3Q23 revenue momentum is anticipated to reflect a recession, a consequence of dwindling new orders since the beginning of the year. The 3Q23 revenues are projected within the $480 million USD to $500 million USD range, the gross margin will be in the range of 38.5% to 40.5%, and the operating profit margin will be in the range of 16.0% to 18.0%. Despite the anticipated slowdown in revenue momentum in the second half of the year, overall profitability is projected to steadily increase as raw material prices normalize and operating efficiency improves, thereby fostering the development of a sound financial structure.”
Seizing Sustainable and New Business Opportunities to Accelerate Future Growth
According to Chairman KC Liu, the incorporation of artificial intelligence (AI) technology and sustainable net-zero applications will drive a new wave of the industrial revolution, propelling the AI of things (AIoT) into a phase of exponential growth. Leveraging the software and hardware integration expertise that the IoT industry has acquired over the years, Advantech has deployed its Intelligent Energy Management Solution (iEMS), its application-focused embedded (AFE) systems, and its industrial AI systems, nurturing areas with high development potential to propel the next phase of growth:
- iEMS: The global transition toward net-zero emissions for sustainability is creating vast business opportunities for emerging applications that manage carbon conservation and carbon reduction. Advantech’s iEMS, a one-stop energy management solution, provides a low-code data visualization platform to assist corporate customers in digitally and intelligently managing their carbon, energy, and critical energy-consuming facilities. This solution addresses numerous sustainability challenges that customers face, including ESG, carbon neutrality, net-zero emissions, carbon reduction, and carbon tariff planning (EU’s Carbon Border Adjustment Mechanism, U.S. Clean Competition Act). This energy management solution not only enhances carbon competitiveness, but also plays a significant role in advancing the sustainable stewardship of our planet.
- AFE: Aiming to position the innovation value of the platform directly at the development of emerging industries, Advantech has deployed EV charging equipment, autonomous mobile robots, and rugged computers, among other domain-focused areas, adopting deep collaborative strategies (i.e., co-development, co-marketing, co-selling) to cultivate the IoT market with co-creation partners.
- Industrial AI: Industrial AI solutions are one of Advantech’s core competencies, developed by integrating imaging and data processing techniques required for AI, lowering the entry barrier for industries to leverage AI, and assisting industry partners with AI upgrades to continue embedding the value of AI within the industry. The product strategies for industrial AI are centered on “industrial AI platform systems” and “industrial AI solutions”— the two pillars around which cooperative relationships are formed with technology pioneers (e.g., Nvidia, AMD, ARM, etc.) to develop edge AI systems, nurture the industrial ecosphere of Independent Software Vendors (ISV), and offer total solutions for industrial applications through advanced industries along with academic research.
Targeting Industry Pioneers with a Sector Driven Mindset of Innovation and Value Creation
Advantech announced at the beginning of the year a plan to initiate a third transformation on a global scale with a sector-driven approach at its core. Whereas previous business models were typically product-centered, this plan will completely transform the model into an industry-centered one, with internal resources directed at eight pioneering sectors: embedded design-in & DMS, application-focused embedded (AFE), industrial equipment and transportation, industrial automation, energy & utilities, iCity services, iHealthcare, industrial cloud and video, and IoTMart. Currently, Advantech has completed reviewing and organizing sales organizations and the teams of its main sales locations. The company will be taking the next step to build a business team composed of domain experts in the eight sectors mentioned. This will drive our advance into the IoT ecosystem and remain knowledgeable of market trends to drive product technology innovation and enhance service value.
