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Globalization Strategy, Edge Computing, and WISE-PaaS Leads Advantech's Long-Term Growth

3/11/2020

Advantech (stock code: 2395), a global leader in Industrial IoT, hosted its latest investor’s meeting today. In 2019, Advantech's earnings per share (EPS) reached NT$10.51, a record high in its history. In the near term, the production capability, component supply, and logistics have been affected by the COVID-19 outbreak. Advantech expects to see its production base in Kunshan return to 85-90% of its production capability by the end of March. Eric Chen, President of General Management and Chief Financial Officer at Advantech, stated that 1Q20 consolidated revenue will be affected by 1) delayed return to work, 2) delayed shipments from clients in Mainland China, and 3) shortage in the supply chain. The management team expects a 5-10% YoY decline for 1Q20 revenues, but cumulative orders from clients in January and February still presents double-digit growth compared to 2019. Advantech will take this opportunity to review and revise their supply chain management and production capability, while overall operations are expected to return to normal in 2Q20, resuming Advantech's long-term growth momentum and strategy.

Advantech’s global strategy has always been a crucial part of its business plan since the firm was established. In 2020, the firm initiated another development in its globalization strategy for growth over the next decade. For this, Advantech will introduce the concept of Globally Integrated Regional Competence (GIRC). With GIRC, we intend to offer highly tailored services with domestic locally tailored features, including R&D, application development, and mergers & acquisitions, to enhance our competitiveness. In addition to strengthening our engagement with current customers, Advantech will expand its channel coverage and enter new application markets. At the same time, we will increase our connections with local talent and organizations.

Linda Tsai, President of Industrial IoT (IIoT) at Advantech, will focus on the following three areas for their 2020 plan: 1) Empower senior management, enhance product development for automation control, data capture, and industrial communication products, as well as improve sales teams efficiency; 2) Enhance our development in smart manufacturing, energy and environment, and smart transportation industries, provide device-to-cloud solutions and accelerate the deployment of IIoT applications; 3) Develop high-end edge computing systems, targeting intelligent video and edge AI industrial applications, to help our partners in AI application development and expand market opportunities.

Miller Chang, President of Embedded IoT (EIoT) at Advantech said, “At the core of Advantech's boards and modules, the focus will be on extension services such as R&D resource integration and high value-added design-in services to optimize our overall product portfolio. Upstream, Advantech will continuously collaborate with major fabless houses to offer innovative embedded platforms and design-in services to enhance our influence in industrial applications. At the same time, Advantech will increase our investment on edge computing system development; integrated peripheral modules and software value-added services; and accelerate the deployment of cloud solutions. Downstream, Advantech plans to establish global design-in and manufacturing services in the five major regions, to focus on vertical markets and enhancing operational capability domestically.”

Allan Yang, Chief Technology Officer at Advantech, pointed out that our software platform plays an important role in the process of popularizing IIoT. After several years of development, adopting Artificial Internet of Things (AIoT) has become a mainstream focus for the second wave of digital transformation (intelligent transformation). Advantech's WISE-PaaS Application Framework Services will accelerate the deployment of AIoT solutions with lower IT resource requirements (low-coding). At the same time, Advantech's Marketplace 2.0 website will provide our partners with decoupled I.App and AI inference engine products, further promoting and encouraging collaboration among multiple platforms.