Thu, Jul 25, 2019 - Page 11 News List

Faraday soars on sales outlook

MASS PRODUCTION:ASIC solutions contributed the most revenue last quarter at 63.8%, while silicon IP made up the least at 16.7% and NRE services constituted 19.5%

By Lisa Wang  /  Staff reporter

Faraday Technology Corp’s (智原科技) shares yesterday rose by the daily maximum after the chip designer on Tuesday voiced optimism about sales this quarter.

The shares closed at NT$60.7 on the Taiwan Stock Exchange. They have advanced 43.5 percent this year, outperforming the benchmark TAIEX, which has risen 12.42 percent in the period.

The Hsinchu-based firm expects revenue to grow 27 percent this quarter, from NT$1.22 billion (US$39.25 million) last quarter, benefiting from growth in nonrecurring engineering services (NRE) and design projects that are entering mass production.

“There is a good chance that NRE revenue will rise to a historic high in the third quarter,” Faraday chief financial officer Grace Tseng (曾雯如) told an online investors’ conference on Tuesday.

“Application-specific integrated circuit [ASIC] design solutions will be the main growth driver this quarter,” with revenue in the sector to rise to the highest level in about two years, Tseng said.

Faraday has also landed a project from a major customer to design ASIC solutions using advanced 14-nanometer process technology, showing that the company has won meaningful contracts using mature technology, it said.

ASIC solutions was the firm’s biggest revenue contributor last quarter, accounting for 63.8 percent at NT$780 million, while the silicon intellectual property (IP) business made up the smallest share of 16.7 percent and NRE services contributed 19.5 percent.

However, gross margin is expected to dip to about 50 percent this quarter as the company’s IP business is expected to remain flat from last quarter, Tseng said.

Faraday’s net profits last quarter dipped 41 percent to NT$56 million, compared with NT$96 million in the first quarter, as gross margin shrank to 54.65 percent from 58.07 percent due to a decline in revenue from the company’s high-margin IP business.

Earnings per share (EPS) reached NT$0.23.

Jih Sun Securities Investment Consulting Co (日盛投顧) said that Faraday’s revenue this quarter would likely increase 28.2 percent from the previous quarter to NT$1.56 billion, but gross margin would fall to 50.8 percent.

Net profits are likely to jump to NT$126 million with EPS of NT$0.51, Jih Sun said in a research note yesterday.

Faraday president Steve Wang (王國庸) said that the effects of a US-China trade dispute on the company would be minor, as most of its chip designs are for China’s domestic market, including smart meters and artificial Internet of Things devices.

Smart meters would be the major revenue growth driver as more chip design projects enter mass production, Wang said.

Chip designs for smart meters are to contribute more than 10 percent to Faraday’s revenue this year, the company said.

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