Holtek Semiconductor Inc (盛群半導體), which makes microcontrollers mostly for home appliances, yesterday posted an 8.2 percent annual decline in net profit for last quarter, dragged down by bigger foreign-exchange losses and higher operating expenses.
Unfavorable foreign-exchange rates and an annual increase of 17.4 percent in research and development spending reduced Holtek’s gross margin to 48.9 percent last quarter, down from 49.3 percent the previous year, company spokesperson Li Pei-ying (李佩縈) told investors.
Li said the downtrend is expected to continue into the current quarter, with gross margin expected to further drop to 48.5 percent, given the weak yuan and high research and development costs.
The company boosted its spending on photomasks by 70 percent last quarter to develop new products, Li said.
The firm also raised wages for research and development engineers to retain talent, she added.
Foreign-exchange losses spiked at NT$14.5 million (US$451,151) last quarter, up from NT$1.8 million the previous year, after the yuan depreciated about 2.45 percent to 6.7 yuan per US dollar in the second quarter, Li said.
As about 70 percent of Holtek’s revenues are yuan-denominated, “movements of the yuan greatly affect the company’s gross margin,” Li said.
Every 1 percent depreciation in the yuan against the US dollar cuts Holtek’s gross margin by about 0.5 percentage points, Li said.
However, revenue hit a record high of NT$1.09 billion during the April-to-June quarter, with a 70 percent contribution from microcontrollers.
This quarter’s revenue is expected to remain at about the same level, while revenue next quarter is expected to rise, Li said, adding that revenue in the fourth quarter usually improves from the third quarter based on a seasonal pattern the company has observed over the past five years.
Li said there was robust demand for microcontrollers used in power management systems, as well as in blood sugar and body fat measuring devices.
In the quarter that ended on June 30, net profit fell to NT$201.96 million, compared with NT$220 million in the same period last year, the company’s financial statement showed.
On a quarterly basis, second-quarter net profit climbed 20.16 percent from NT$168.08 million in the first quarter, according to the statement.
In the first half of this year, Holtek generated NT$370.04 million in net profit, or earnings per share of NT$1.64, down by 2.8 percent from NT$380.55 million, or NT$1.68 per share, in the same period last year.
Holtek shares rose 0.55 percent to close at NT$55.3 in Taipei trading yesterday, outperforming the TAIEX, which lost 0.24 percent.
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