Novatek Microelectronics Corp (聯詠科技), which supplies chips that control flat-panel displays, said its net income fell last quarter because of weaker demand for large panels, falling prices and the rising value of the New Taiwan dollar.
The Hsinchu-based company said in a statement that its net income dropped 27.24 percent to NT$896 million (US$30.86 million) in the fourth quarter from the third quarter. Compared with the same period of the previous year, the decline was 16.2 percent.
Earnings per share were NT$1.5 in the fourth quarter, down from NT$2.06 in the third quarter and NT$1.79 a year earlier, the statement said.
Novatek, established in 1997, is a spin-off of United Microelectronics Corp (聯電), the world’s -second-biggest contract chipmaker. It said revenue fell 7.52 percent to NT$8.72 billion in the fourth quarter from the previous quarter, but was up 19.7 percent from a year ago.
Gross margin reached 25.12 percent in the October to December period, down from 27.82 percent in the previous three months and compared with 29.3 percent a year earlier.
“The fourth quarter decline in revenue was mainly owing to weak demand for large panels and end customers’ inventory adjustments,” Novatek said in the statement. “The quarter-on-quarter gross margin loss of 2.7 percentage points mainly resulted from pricing erosion and -appreciation of the NT dollar.”
Looking forward, the company said it expected revenue to be flat or increase slightly in the current quarter from last quarter, the local cable TV network UBN quoted Novatek president Steve Wang (王守仁) as saying at an investors’ conference yesterday in Hsinchu.
Wang said he also expects gross margin to also stay put this quarter from last quarter, without taking the NT dollar appreciation into account.
The NT dollar appreciated 3.07 percent against the US dollar in the fourth quarter and it has risen 3.48 percent so far this year to close at NT$29.31 yesterday in Taipei trading, the central bank’s data showed.
Earlier this month, the company forecast that this month’s sales would continue to increase sequentially, largely driven by pull-in demand ahead of the Lunar New Year holiday, and that it expected sales next month to decline seasonally, before -rebounding again in March.
For this year, the company maintains a positive view on demand for its chips owing to the growing popularity of both smartphones and tablet PCs, as well as expected corporate replacement demand in the second half of the year, the UBN report cited Wang as saying.
For the whole of last year, Novatek’s net income totaled NT$4.58 billion, up 14.07 percent from 2009, on revenue of NT$36.26 billion, up 34.32 percent year-on-year. Gross margin was 26.94 percent, down from 30.41 percent in 2009, while earnings per share were NT$7.65, up from NT$6.78 the previous year.
Novatek shares closed 1.24 percent higher at NT$97.8 yesterday ahead of the release of the company’s financial results. The stock has risen 4.04 percent since the beginning of the year, compared with a 1.45 percent increase on the TAIEX.