Elan Microelectronics Corp (義隆電子), which supplies touch-screen driver integrated circuits for Google Inc’s Nexus 7 tablets, yesterday reported record-high net profits for last quarter, driven by increased demand for touch screens used in handsets, tablets and notebook computers.
Since several PC brands are set to launch new notebooks running Microsoft Corp’s Windows 8 system this quarter, Elan expects revenue this quarter to fall at a slower-than-seasonal pace of 7.5 percent in the conventionally slack season to a similar level hit in the second quarter of NT$1.89 billion (US$64.5 million).
Touch-screen driver ICs and touch-related products accounted for 63 percent of Elan’s revenue totaling NT$2.01 billion last quarter, from 53 percent in the April-June period.
Elan’s forecast beat the 9 percent quarterly decline in revenue estimated by Credit Suisse analyst Jimmy Huang (黃浩洋) on Monday.
Huang’s estimate was already better than seasonal contraction of 15 percent to 20 percent in the final quarter of a year.
“Demand for Win 8 [touch screen driver ICs] is still growing,” Elan chairman and president Yeh I-hau (葉儀皓) told an investors’ conference yesterday.
“In fact, demand is surprisingly good. Clients are facing chip shortages because of limited capacity from our contract chipmakers,” he said.
Shipments of Windows 8 laptops were higher than Elan’s expectation, Yeh said, amid widespread doubts about sale of new notebooks.
“The Win 8 laptops are not as expensive as some thought,” he said.
Net income soared 62 percent to NT$325 million, or NT$0.83 per share, last quarter from NT$201 million, or NT$0.52 a share, in the same period of last year, exceeding the NT$305 million, or NT$0.73 per share, estimated by Huang.
Gross margin could rise further this quarter from 41 percent last quarter, as shipments of better-margin touch screen ICs could increase, while shipments of lower-margin touch pads and microcontroller ICs would decrease because of low seasonal demand, Elan said.
Touch screen ICs for tablets — mostly for Google’s Nexus 7 tablets — are expected to drop by 10 percent to 20 percent quarterly this quarter from 2.5 million units last quarter, because of stiff competition from Apple Inc’s new iPad mini and new models from other companies, Elan said.
Elan supplies touch screen driver ICs for Legend Group Ltd (聯想), Acer Inc (宏碁), Samsung Electronics Co and Toshiba Corp.
Shares of Elan rallied 1.83 percent to close at NT$49.95 yesterday in Taipei trading, implying a 20 percent upturn over the next 12 month from the NT$60 target price set by Huang. The stock out-performed the TAIEX, which lost 0.48 percent.
Huang upgraded the rating on Elan to “out-perform” from “neutral” on Monday, expecting the company to benefit from growing demand for touch screen ICs used in new Windows 8 notebooks.
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