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Taiwan lens maker Largan takes hit from Huawei sanctions

Key supplier to smartphone industry squeezed by soaring PC chip demand

A Huawei store in Taipei: The Chinese smartphone maker had accounted for 10% to 20% of orders for lens supplier Largan. (Photo by Yu Nakamura)

TAIPEI -- Largan Precision, the world's top producer of smartphone camera lenses, reported Thursday a 14% year-on-year drop in net profit to 6.9 billion New Taiwan dollars ($248 million) for the quarter ended in December following U.S. sanctions against major customer Huawei Technologies.

Sales at the Taiwanese company, a bellwether for the smartphone industry, sank 17% to NT$15.3 billion.

"The sudden halt in orders from Huawei had a significant impact," CEO Adam Lin said in an earnings call.

Huawei had accounted for 10% to 20% of Largan's orders -- second only to Apple's share of over 30% -- and this revenue evaporated after the U.S. last year banned exports of products made with American technology to the Chinese telecommunications company.

Business conditions look even worse now, as the smartphone industry grapples with a semiconductor shortage. As more people work from home amid the pandemic, demand for personal computers is surging, creating a competing source of demand for a limited supply of chips.

"January's sales are lower than December's," Lin said. "The semiconductor shortage is a serious issue that is affecting our company. Sales will be lower in February than in January. We can't tell how March will look."

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