Cart
0
Advantech (TWSE: 2395), a global leader in industrial IoT, is hosting an investor conference today, presided over by Chairman KC Liu alongside three co-presidents – Mr. Eric Chen, Ms. Linda Tsai, and Mr. Miller Chang. The global end markets demand remained conservative due to the systematic impacts of geopolitical issues and high inflation. Advantech’ 1H24 revenue was NT$28.523 billion, dropped 17% YoY; the gross profit was NT$11.479 billion (gross margin of 40.2%), the operating profit amounted to NT$4.084 billion (operating margin of 14.3%), and the consolidated net income after tax totaled NT$4.107 billion (dropped 31% YoY), while the EPS reached NT$4.78 in 1H24.
“As the global economic slowly recovered, the overall order demand has rebounded. Orders-to-Shipments ratio (BB ratio) was 1.01, which rose above 1 for the 1st time since 2Q22. For regional breakdown, 2Q24 BB ratio of North America, Europe and China were 1.00, 1,04 and 1.02, respectively, indicating steady recovery in global macro and enterprise spending. Among regions, China, Korea, and Taiwan markets showed strong demand momentum, with revenue growth expected to increase single-digit YoY. The 3Q24 revenues are projected to be within the range of $450 million USD to $470 million USD, with the gross margin expected to be around 39.0% to 41.0%, and the operating profit margin will be in the range of 14.0% to 16.0%, resulting in an overall increase in operations on a quarterly basis.” - Eric Chen, President of General Management and CFO
Integration of Software and Hardware, Forming Alliances within the AI Ecosystem
International research institutions anticipate that in the future, AI technology will become as ubiquitous in daily life. It is estimated that by 2032, the global Edge AI CAGR will reach 26%, presenting limitless business opportunities in various application fields, but also facing challenges in scalability. Miller Chang, President of Embedded-IoT Group, stated that Advantech deeply understands the importance of establishing and collaborating within the ecosystem for the scalability of edge AI, which is a key factor in overcoming the implementation and challenges of edge AI. Leveraging its industry influence, Advantech has formed alliances with over 50 global partners to jointly create an Edge AI ecosystem. In terms of upstream chip manufacturers, it has deepened cooperation with leading AI chip companies globally to rapidly develop x86 and ARM-based Edge AI computing platforms, including Edge AI Acceleration Modules (EAI), Edge AI Modules (AOM), and AI-Ready Edge Systems (AIR). Furthermore, it provides integrated value-added services for Edge AI hardware platforms with Edge AI SDK software development kits to accelerate the evaluation of performance, AI model training, and AI solution deployment. At the same time, Advantech prioritizes leading AI-driven emerging applications, such as medical imaging, machine vision, and autonomous robots, and integrates leading AI chip manufacturers’ SDK and key peripheral modules into Advantech's Edge AI system platform, significantly reducing the customer's POC implementation time.
"Advantech foresees the increasing demand for industrial edge AI computing power from customers. The company has fully invested in innovation to expand the depth and breadth of its edge AI product series. In addition to high-performance AI vision cameras and edge AI inference systems, it plans to launch the NVIDIA MGX™ server, making the overall product layout more comprehensive. Furthermore, leveraging its outstanding product capabilities, Advantech has successfully expanded system integration services and has already provided L10 system assembly services in pilot locations in the United States, China, the Netherlands, and Taiwan. There are plans to expand assembly, integration, and testing services for L11 Rack cabinets in the future. In terms of AI software, it also strives for breakthroughs, integrating the core strengths of Advantech in edge computing hardware and AI agent software to provide high-value-added intelligent solutions for semiconductor, medical, and factory industry customers, becoming the best strategic partner for enterprise customers in edge AI." - Linda Tsai, President of the Industrial-IoT Group
Organizational Transformation from Product to Sector Driven
Advantech’s operational performance has experienced a significant decline over the past year. In addition to external macroeconomic factors, it is also necessary to review and adjust the internal management structure. Advantech has actively reviewed and responded to these internal challenges, and has fully initiated a strategic transformation driven by Sector since 2023. After several months of discussion, specific action plans have been formulated. In terms of organization, in addition to the product business groups, a sector driven group has been established at the headquarters to focus on market development and sales planning. Additionally, several redundant and small-scale product departments have been streamlined and merged, while talent and resources are being reallocated to enhance overall combat effectiveness. In terms of business groups, the four major sectors are gradually forming a cross-selling mechanism: iSystem and iAutomation, Service IoT and Embedded IoT are able to share product resources and each target different domain markets. At the same time, efforts are being made to strengthen regional business and channel management capabilities, gradually transforming into an industry-focused organizational structure, which further aligning with industry needs and providing integrated software and hardware solutions.
Looking forward to 2025 and 2026, order demands from North America and China have shown signs of recovery. The Sector Driven transformation, which has been brewing since 2024, is expected to bring growth momentum. Additionally, the emerging trend of generative AI may lead to the increased demand for AIOT+ Edge Computing due to the reform of niche industry-focused AI Agent applications. As a diversified industrial IoT enterprise that involved in edge computing and IoT software orchestration, we provide solutions for different vertical industry applications, Advantech aims to bring the next wave of growth and recovery for shareholders.
