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COVID-19 Impacts Short-Term Operation but Drives Long Term Digital Transformation Demand


Advantech (stock code: 2395), a global leader in Industrial IoT, hosted its latest investor’s meeting today. Advantech reported an EPS of NT$5.14 for 1H20, up 2.4% YoY. Mr. Eric Chen President of General Management and CFO of Advantech, stated that, “The rebound of 2Q20 revenues was driven from delayed shipment of customer orders in 1Q20 but overall 1H20 revenues still declined 3.8% YoY. Advantech focused on vertical segment development and operational improvements, which led to a better margin profile in 1H20. The operating margin came in at 17.8% in 1H20. However the bookings in 2Q20 indicated a 10% QoQ decline, which will impact the revenues for 3Q20. This means customers are concerned about future end user demand. Based on current bookings and backlog status, Advantech estimates that 3Q20 revenues might be in the range of US$440~460mn with 38.5%~40.5% gross margin and the operating margin might be in the range of 15.5~17.5%.”

Advantech’s global strategy is the key to provide differentiated service to customers. Ms. Linda Tsai, President of Industrial IoT Group of Advantech, commented that, “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), which indicates we will enhance back-end support in global operations and strengthen local service competence. Customer engagement, vertical market development, and talent investment will be critical areas in the GIRC strategy. With the best value-added localized service to embedded system and industrial IoT customers, we intend to become the leading company in the industrial IoT area.”

Allan Yang, Chief Technology Officer at Advantech, said, “The trend is clear that enterprises are forced to upgrade their capability via AIoT digital transformation. Advantech WISE-PaaS introduced the Kubernetes-based cloud-native industrial data architecture platform, which will shorten the development timetable and entry barriers for enterprises in data visualization, structuration, and intellectualization. Advantech has recently deployed proof of concept solutions with partners in smart factory, building, hospital, cold-chain logistics, retail, and green energy areas. At the same time, we implemented WISE-Marketplace—an open industrial app marketplace where we invite developers to launch their apps onto the marketplace. We also invested in some domain-focused system integrators (DFSI) to encourage the process of deploying AIoT solutions within the customers’ areas of domain expertise. We believe this industrial app platform offers great future potential. Advantech targets WISE-PaaS platform and WISE-Marketplace at becoming the top 10 industrial IoT software platform by 2025. With support from more than 500 domain focused system integrators, we already have more than 10 industrial apps with global penetration.”

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