HiDeep
The author is an analyst for NH Investment & Securities. He can be reached at jack.baek@nhqv.com -- Ed.
Amid rising market demand, it is looking increasingly probable that HiDeep will start mass production of its touch ICs and stylus solutions by as early as end-2023. In particular, we note the anticipated expansion of touch IC applications to include smartphones. We expect display makers to adopt HiDeep’s cost-effective stylus solutions as they do not require stylus sensors.
Mass production of both touch ICs and stylus solutions to start as early as end-2023
We view expectations toward the adoption of stylus solutions by display makers as remaining valid, pointing out the need to maximize the utilization of enlarged OLED displays. HiDeep’s related solutions should come to be adopted in parallel with the current stylus method, but full-transition will likely take some time. We expect the company to start mass production through the client most capable of quickly adopting the solution.
HiDeep’s stylus solutions boast strengths in that they can: 1) replace stylus sensors, resulting in both cost reduction and design advantages; and 2) prevent touch errors through noise cancellation. Since foldable phones require more than two stylus sensors, we believe that the company’s touch sensor production technology and stylus IC one-chip technology offer higher benefits (versus rival products) to customers.
Focus on timing of adoption rather than current year earnings
With adoption of HiDeep’s touch ICs for low/mid-priced mobile phones looking unattainable this year, we have trimmed down our 2023 earnings forecasts. That said, we note that the firm’s share price does not reflect short-term earnings since the company enjoys clear high earnings growth potential that should start blooming from 2H24, assuming that its stylus solutions are adopted from 2024. Ultimately, the movement of HiDeep’s share price is to hinge upon whether the adoption of its stylus solutions by existing clients and/or by potential clients brings forward a period of new sales generation.