Tue, Jul 30, 2019 - Page 11 News List

Holtek profit falls 18% as Chinese demand falters

SIX-MONTH WAIT:Although visibility for the rest of this year remains low, the company said that Chinese firms have shifted orders to it to avoid US trade risks

By Lisa Wang  /  Staff reporter

Holtek Semiconductor Inc (盛群半導體), the nation’s largest designer of microcontroller units for consumer electronics, yesterday said that second-quarter net profit dropped more than 18 percent annually as Chinese customers cut demand due to the US-China trade dispute.

Holtek said it holds a conservative outlook for the second half of this year, but expects a positive effect from transferred orders going forward.

Some Chinese companies approached Holtek to shift orders from their existing suppliers to reduce risks from the trade dispute, but it would take at least six months to start seeing contributions, the company said.

“We are still in the process of verifying our products for those new customers,” Holtek spokesman Armstrong Tsai (蔡榮宗) told an investors’ conference in Taipei. “Order visibility remains low for the second half.”

Revenue in the second half could be little changed compared with NT$2.24 billion (US$72 million) in the first half, Tsai said.

China contributed 76 percent to Holtek’s revenue in the first two quarters, a company financial statement showed.

“Chineses and Taiwanese customers are scaling back orders for graphics adapters [used in gaming computers], keyboards, fingerprint [chips] and motors,” Tsai said.

“Some of our Chinese customers have sent us messages that orders for [chips used in] wireless stereo earbuds will be fewer than expected due to the trade tensions,” he said.

Holtek counts Chinese smartphone makers Huawei Technologies Co (華為) and Xiaomi Corp (小米) as its top two customers in microcontroller units for wireless earbuds.

It expects to add two new clients for its microcontroller units this year, Tsai said.

That would help boost shipments of microcontroller units for wireless earbuds to about 6 million this year, beating the company’s previous estimate of 5 million units, he said.

The company also expects an uptick in demand this quarter for microcontroller units used in biometric measurement devices, security applications, touch units and advanced 32-bite units.

In the April-to-June quarter, net profit slumped 18.42 percent to NT$254.87 million from NT$312.43 billion a year earlier, but increased 25.32 percent from NT$203.37 million in the first quarter.

That translated into earnings per share of NT$1.13, down from NT$1.38 a year earlier, but up from NT$0.9 in the prior quarter.

Holtek saw gross margin improve to 50.7 percent last quarter from 49.8 percent a year earlier, but down from 50.9 percent in the first quarter.

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