Wed, Aug 07, 2019 - Page 12 News List

Novatek warns of possible decline in its 3Q revenue

By Lisa Wang  /  Staff reporter

Revenue would slide slightly this quarter from a record high last quarter at the worst, Novatek Microelectronics Corp (聯詠) said yesterday, as demand for inventory buildup slackens amid global economic uncertainties.

Revenue would be in the range from NT$16.1 billion to NT$16.7 billion (US$510.95 million to US$529.99 million), said Novatek, which makes driver ICs for LCD panels.

That indicates that revenue might seesaw between a quarterly decline of 1.25 percent and a quarterly increase of 2.42 percent, from NT$16.31 billion for last quarter.

Revenue for the first seven months this year totaled NT$36.66 billion, up 27.5 percent from the same period last year.

“As macroeconomic uncertainties remain, visibility for inventory buildup demand is low for the third quarter, during which demand usually picks up ahead of the high season in the fourth quarter,” Novatek president Steven Wang (王守仁) told an investors’ conference in Hsinchu

Customers are placing rush, or short-term orders, rather than long-term contracts, Wang said.

Demand from smartphone makers would be flat this quarter compared with the second quarter, but there would be some exceptions, as some makers are gearing up for new 5G models, he said.

Demand from PC makers would be little changed this quarter, as many customers frontloaded their orders last quarter in a bid to avoid US tariffs on Chines imports that are set to take effect next month, Wang said.

Nonetheless, demand from TV panel makers is weakening as some manufacturers cut production to cope with excess inventories, he added.

Revenue from LCD panel’ drive ICs is expected to decline this quarter on falling demand for TV panels, while system-on-a-chip (SoC) is forecast to contribute more revenue on the back of seasonal demand, the company said.

Gross margin is to stay between 30 percent and 32 percent this quarter, compared with last quarter’s 32.09 percent, it said.

Net profits grew 34.43 percent annually in the second quarter to NT$2.13 billion with earnings per share (EPS) of NT$3.5, the best quarterly earnings in about 11 years, the company said.

In the first half of this year, net profits surged 63.86 percent to NT$4.1 billion, with EPS of NT$6.73. Gross margin was 32.41 percent during the first six months, the company said.

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