<GIS Earnings Call> CapEx Raised to NT$8 Billion; 800G Optical Communication Laser Packaging Products to Ship by Year-End

Touch module manufacturer GIS-KY (6456-TW) held an earnings briefing today (24th), where CFO Lin Yuan-Ping announced that due to robust end-market demand, the board has approved raising the company’s capital expenditure for the year to over NT$8 billion.

Of this amount, NT$4–5 billion will be invested in packaging and testing equipment for optical communication laser light sources. The first phase of equipment has already begun trial production, with the goal of achieving small-volume shipments in the fourth quarter of 2023 and making significant revenue contributions starting in 2024.

Lin stated that the company initially estimated full-year capex at around NT$5–6 billion, but due to expanding customer demand, the investment scale has been further upgraded. In early September, the board approved a combined NT$3.3 billion capex plan for Taiwan Indeson and its Vietnamese subsidiary, primarily for purchasing optical communication laser packaging and testing equipment. These machines are expected to arrive gradually in the first half of 2024 and commence mass production.

On technology and product strategy, Lin noted that the company is focusing on high-power, high-end chip packaging services above 800G, and already possesses mass production capabilities for both CW Lasers (continuous wave lasers) and EMLs (electro-absorption modulated lasers). The company is currently engaging primarily with international Tier-1 manufacturers, having already invested over ten billion NT dollars in machinery setup and trial production. Production lines are now being optimized for yield and efficiency.

Lin emphasized that GIS has accumulated extensive experience in chip packaging and testing through years of深耕 in ultrasonic and capacitive fingerprint recognition, earning certifications from top global clients. This gives the company a technological edge and entry barrier into optical communication packaging. Once established in laser source packaging, the company may consider extending further upstream and downstream along the industrial chain.

Beyond optical communications, civil engineering work at the new Vietnam factory is expected to complete by the end of 2023, with mass production commencing in early 2024. The facility will not only supply touch modules to major customers but also handle part of the optical communication light source packaging operations. Concurrently, R&D on new technologies such as micro-LEDs and optical waveguides for automotive and augmented reality (AR) applications is progressing. These initiatives are expected to enter a significant commercialization phase between 2027 and 2028.

Reviewing H1 performance, Lin mentioned that due to memory shortages affecting procurement momentum for tablets and notebooks, consolidated revenue for the first half was NT$26.5 billion, down 22.3% year-on-year. The company reported a net loss of NT$1.257 billion, or NT$3.76 per share. However, as of the end of June, total cash and time deposits reached NT$22.2 billion. After deducting bank loans, net cash stood at NT$11.8 billion, with a debt ratio of 47.7%. This solid financial structure continues to support the company’s medium- to long-term transformation and investment plans.