Vanguard International Semiconductor Corp (世界先進), which makes controller chips used in LCD panels, yesterday posted its weakest quarterly net profit in five quarters, as flagging smartphone demand in China and an appreciating local currency ate into profitability.
Net profit contracted 15 percent to NT$1.15 billion (US$38.12 million) in the quarter ending March 31, compared with NT$1.35 billion in the same quarter last year, company data showed.
The company booked a non-operating loss of NT$84 million for last quarter, mostly from a foreign-exchange loss, compared with a non-operating profit of NT$171 million in the previous quarter and NT$36 million a year earlier.
Vanguard expects the impact of a rising currency to escalate this year. A more robust New Taiwan dollar would reduce its gross margin by 2 percentage points this quarter, based on the company’s foreign-exchange assumption of NT$30.2 to the US dollar, up 4 percent from NT$31.4 last quarter, Vanguard said.
Gross margin is forecast to slip to between 29 percent and 31 percent this quarter from last quarter’s 32.1 percent, a five-quarter low, Vanguard said.
Last quarter, a rising NT dollar shaved 0.3 percentage points off its gross margin.
“Unfavorable foreign-exchange rates could cut into the company’s growth in the first and second quarters,” Vanguard vice president D.L. Tseng (曾棟樑) said.
Higher raw wafer prices and increasing labor costs also nibbled at gross margin, the chipmaker said.
Revenue this quarter is forecast to fall by between 0.16 percent and 6.55 percent to the range from NT$5.85 billion to NT$6.25 billion from NT$6.25 billion in the first quarter, Vanguard said.
The revenue projection fell short of most analysts’ expectations. Credit Suisse analyst Randy Abrams was expecting the chipmaker to make NT$6.27 billion this quarter, while others forecast a higher figure of NT$6.83 billion on average, according to Credit Suisse report.
Customer demand for controller chips used in LCD TVs and power management ICs should pick up this quarter from last quarter, while some customers are still digesting inventory, Vanguard chairman Leuh Fang (方略) told investors.
Overall, wafer demand will be flat this quarter compared with last quarter, Fang said.
“We have about two months of order visibility,” Fang said.
Vanguard expects demand to post a marked improvement in the second half, following the seasonal pattern.
“Chinese smartphone companies largely expect demand to return to growth in the second half, with restocking picking up,” Vanguard worldwide sales and planning division vice president Thomas Chang (張東隆) said.
Asked about Vanguard’s progress in tapping the fingerprint sensor market, Chang said customer adoption is slow, but shipments are expected to surge in the fourth quarter.
Fingerprint sensors are forecast to contribute 5 percent to the company’s total revenue at the end of the year, the chipmaker said.
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
Artificial intelligence (AI) giant Nvidia Corp’s most advanced chips would be reserved for US companies and kept out of China and other countries, US President Donald Trump said. During an interview that aired on Sunday on CBS’ 60 Minutes program and in comments to reporters aboard Air Force One, Trump said only US customers should have access to the top-end Blackwell chips offered by Nvidia, the world’s most valuable company by market capitalization. “The most advanced, we will not let anybody have them other than the United States,” he told CBS, echoing remarks made earlier to reporters as he returned to Washington
RSS