Local analog chip designer Richtek Technology Corp (立錡) yesterday said its sales grew 78.78 percent to a record high of NT$1.095 billion (US$34.5 million) last month from a year earlier and that it expected sales this quarter to increase by between 7 percent and 18 percent to between NT$2.91 billion and NT$3.21 billion from the first quarter because of rising market demand.
In the January-to-March period, Richtek said it saw net income of NT$525 million, or NT$3.69 in earnings per share, on a revenue of NT$2.719 billion, but analysts said the Hsinchu-based company’s growth momentum was likely to slow down into next year because of intensifying competition from regional fabless peers.
While the company’s projected quarterly sales in the April-to-June period would post a new record high, vice president Chang Kuo-cheng (張國城) said yesterday he expected gross margin to fall to between 35 percent and 38 percent in the second quarter, from 37.7 percent in the first quarter and 38.8 percent in the fourth quarter of last year.
During a conference call with investors yesterday, Chang attributed the declining gross margin to the company’s product-portfolio strategy in shipping more lower-margin notebook products to gain market share over its US and local competitors.
FOUNDRY SUPPLY
In addition, Chang said the company’s lowered gross margin guidance for the second quarter was also the result of tight foundry supply that is affecting its 8-inch (200mm) capacity ramp.
He did not specify the size of Richtek’s market share in notebook products, saying only that the company would “improve the cost structure of notebook products” to deal with the gross margin problem.
Operating margin, meanwhile, would be between 19 percent and 22 percent in the current quarter compared with 21.7 percent in the first quarter, Chang said.
In the first three months, computing applications accounted for 67 percent of total sales, up 5 percentage points from the previous quarter because of higher demand in the notebook business, according to the company’s financial sheet.
Sales of communications products fell 4 percentage points to account for 18 percent of the total, while those of consumer electronics items declined slightly to 10 percent.
Ahead of yesterday’s conference call, analysts had already raised concerns about the company’s earning growth prospects, should new products, such as LED lighting, fail to show successful results.
CAUTIOUS
Citigroup analyst Timothy Lam (林子謙) said in a client note yesterday he was cautious about Richtek, which saw its shares plunge by the daily limit to NT$299 in Taipei trading.
He expected more downside risks ahead because of “expensive valuation and double-booking risk by its customers.”
“The ramp in notebook products will likely drag on its overall margins and limit upside to earnings. In addition, Richtek will still likely face increasing competition from existing IDMs and potential second-quarter inventory over-build by its customers,” Lam wrote in the note, referring to integrated device manufacturers who design and produce chips in their own factories.
Also, the company is likely to face pricing pressure in the second half of the year as its migration to 8-inch production from 6-inch appears to be gradual and will only see a meaningful contribution next year, Lam added.
Citigroup offered a “sell” rating on Richtek shares with a target price of NT$232. This was compared with Yuanta Securities Corp’s (元大證券) target price of NT$300, also with a “sell” recommendation.
Separately, the company’s board also approved a proposal to distribute an NT$8 cash dividend per share and a 5 percent stock dividend (50 shares per 1,000 held) to shareholders.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
Zhang Yazhou was sitting in the passenger seat of her Tesla Model 3 when she said she heard her father’s panicked voice: The brakes do not work. Approaching a red light, her father swerved around two cars before plowing into a sport utility vehicle and a sedan, and crashing into a large concrete barrier. Stunned, Zhang gazed at the deflating airbag in front of her. She could never have imagined what was to come: Tesla Inc sued her for defamation for complaining publicly about the vehicles brakes — and won. A Chinese court ordered Zhang to pay more than US$23,000 in
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday held its first board of directors meeting in the US, at which it did not unveil any new US investments despite mounting tariff threats from US President Donald Trump. Trump has threatened to impose 100 percent tariffs on Taiwan-made chips, prompting market speculation that TSMC might consider boosting its chip capacity in the US or ramping up production of advanced chips such as those using a 2-nanometer technology process at its Arizona fabs ahead of schedule. Speculation also swirled that the chipmaker might consider building its own advanced packaging capacity in the US as part