Novatek Microelectronics Corp (聯詠), the nation’s biggest supplier of driver ICs for LCD panels, yesterday reported a 5.59 percent sequential decline in net profit for last quarter due to a lower gross margin.
Net profit fell to NT$1.23 billion (US$39.04 million) in the quarter ending Sept. 30, compared with the previous quarter’s NT$1.3 billion, the company said.
Earnings per share dropped to NT$2.02 over the period, from the previous quarter’s NT$2.14, while gross margin shrank to 27.71 percent from the second quarter’s 28.05 percent, the company’s financial statement showed.
Novatek president Steve Wang (王守仁) blamed the fall on an increase in shipments of lower-margin driver ICs for high-definition handset panels.
Wang said the company’s gross margin would remain at 27 percent to 28 percent this quarter.
However, revenue would contract by 4.33 percent to 7.65 percent, and would be in the NT$11.1 billion to NT$11.5 billion range this quarter, compared with the second quarter’s NT$12.02 billion, Wang said.
“We expect to see a seasonal correction in the fourth quarter,” Wang told investors.
Novatek’s revenue last month already reflected a seasonal weakness, falling 6 percent from September’s NT$4.11 billion to NT$3.86 billion.
Shipments of driver ICs for TV panels would decrease slightly this quarter, while shipments for driver ICs used in smartphone panels would increase, Wang said.
Driver ICs for LCD panels are the largest revenue source for Novatek, making a 63 percent contribution in the third quarter.
However, Wang is upbeat about the company’s prospects next year.
He expects the growing popularity of ultra-high-definition (UHD) TV sets to stimulate demand for driver ICs.
The penetration of UHD TV sets is expected to climb to 35 percent next year from about 25 percent this year, Wang predicted.
UHD TV panels require at least twice as many driver ICs as high-definition TV panels of the same size.
In addition, mobile phone makers are predicted to adopt better-resolution displays for new models, which would also boost demand for driver ICs, he said.
Commenting on new touch and display integration (TDDI) chips, Wang said Novatek planned to ramp up production of such chips next quarter.
He said he expects revenue from TDDI chips to make a meaningful contribution in the second half of next year, as higher costs would hinder rapid adoption of such chips in the short term.
Novatek shares rose 0.44 percent to NT$115 yesterday, outperforming the the TAIEX, which gained 0.3 percent.
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