Local chip designer Faraday Technology Corp (智原科技) on Friday last week gave an optimistic outlook for the second half of the year as an annual upcycle in shipments for niche applications takes hold.
The Hsinchu-based company expects revenue this quarter to increase 25 percent sequentially, boosted by expected growth in its non-recurring engineering services (NRE) and application-specific integrated circuit (ASIC) design solutions, Faraday said during a teleconference.
However, growth would likely remain flat for the company’s high-margin silicon intellectual property (IP) rights business, it said.
It has seen more customers take their designs to the mass-production phase, but not all mass-production orders have stellar margins and they are typically lower than those of its other activities, the company said.
Therefore, the company has become more selective with its customers and would seek to avoid resource-intensive projects that might not make it into the mass-production phase, it said.
Commenting on volatility and a recent rally in the cryptocurrency market, Faraday said that such applications would continue to make up about 10 percent of its total revenue this year.
Communications, artificial intelligence, Internet of Things, industrial and other niche applications are to remain its main focus, the company said.
In the second quarter of this year, the company’s net income tumbled 58.7 percent quarterly to NT$28 million (US$915,272), with earnings per share of NT$0.11.
The company attributed the decline to higher costs and a lower non-operating income.
Second-quarter revenue rose 5.9 percent quarterly to NT$1.10 billion, with NRE contributing 32.1 percent to sales, up from 27.6 percent in the first quarter, and IP accounted for 18.1 percent, up from 17.4 percent, while the contribution of ASIC dropped from 55 to 49.8 percent.
Gross margin last quarter rose 0.7 percentage points to 54.7 percent, but operating margin dropped 1.2 percentage points to 3.5 percent, the company said.
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