TAIPEI -- Largan Precision, a Taiwanese manufacturer of optical lenses, has spent the past three decades honing its technology, steeling itself against price competition and widening its profit margins. Its focus on quality has paid off in the form of a 30% share of the global market for smartphone camera lenses.
But Largan has a weakness: a heavy reliance on orders from Apple.
Now, with the U.S. company experiencing a sharp fall in iPhone production, Largan is feeling some serious revenue pain. Its new priority, as a result, is to diversify its customer base.
Largan was founded in 1987 by Scott Lin, who had worked for German autoparts supplier Robert Bosch. The Taiwanese company struggled to make ends meet in the early years but continuously sought to improve its technology. The tightly knit organization is now run by Chairman Lin En-chou and CEO Adam Lin, the founder's sons.
For the fiscal year ended December, consolidated revenue increased by more than 20%, to 55.8 billion New Taiwan dollars ($1.74 billion). Net income also rose by over 20%, to NT$24.1 billion. Both were record figures. Brisk iPhone-related orders from Apple fueled the strong performance.
Things have turned sour, however. Largan's monthly revenue in June dropped over 20% on the year for the seventh consecutive month.
Largan Precision boasts a net profit margin of 43% -- exceptionally high for a manufacturer. This is thanks to the company's efforts to enhance efficiency and boost yields by developing its own mold and manufacturing equipment.
For investors, the question is whether Largan can parlay its strengths into new contracts from someplace other than Cupertino.