Micro-Star International Co (MSI, 微星科技), which makes gaming computers, graphics cards and motherboards, is forecast to see revenue fall this quarter from last quarter due to supply tightness and seasonality, Credit Suisse Group AG said on Thursday.
The COVID-19 pandemic has caused an increase in orders due to work-from-home demand, leading to supply shortages.
Many components, especially central processing units, graphics processing units (GPUs), panels, driver ICs and power management ICs, are in short supply, analysts said.
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MSI’s sales are forecast to decline 2.47 percent quarterly to NT$39.75 billion (US$1.38 billion) in the October-to-December period as component constraints would likely affect the company’s computer and graphics card sales, while its motherboard business might slow down due to seasonal factors, Credit Suisse said in a note.
Sales would also come under pressure as Nvidia Corp’s new Ampere-architecture GPU faces wafer production issues, it said.
“We previously expected MSI’s system and graphics card sales could further grow in the fourth quarter, as we believe new-generation GPU platform migration should provide further uplift to its gaming-centric business,” Credit Suisse analysts led by Jerry Su (蘇厚合) wrote in the note.
“However, the 8-inch wafer constraint and display tightness could impact MSI’s system shipments in the quarter, while graphics card momentum is also facing some bottleneck given Nvidia’s new GPUs are apparently having wafer foundry production issues,” they said.
MSI’s gross margin is expected to slide to 15.4 percent, from 15.8 percent in the third quarter, due to a change in its product mix, Credit Suisse said.
Higher logistics and transportation costs could remain a burden amid the pandemic and lower MSI’s operating margin to 7.3 percent, from 7.5 percent, it said.
Earnings per share are projected to fall to NT$2.97 from last quarter’s NT$3.09, it said.
MSI last week reported net profit of NT$2.61 billion for the third quarter, up 24.4 percent from the previous quarter and 52.58 percent from a year earlier.
Last quarter’s net profit marked the highest for a single quarter in the company’s history.
Revenue rose 15.33 percent quarter-on-quarter and 24.2 percent year-on-year to NT$40.76 billion, thanks to rush orders for PCs due to stay-at-home and teleworking demand.
In the first three quarters of this year, net profit totaled NT$5.97 billion, or earnings per share of NT$7.06, up 39.6 percent from a year earlier.
MSI has seen robust orders since June, with monthly revenue hovering at about NT$13.2 billion to NT$13.8 billion. Its cumulative revenue in the first 10 months of this year reached NT$118.44 billion, an annual increase of 18.13 percent.
The 8-inch wafer constraint and GPU tightness might push the company’s orders from this quarter to next year and support its sales momentum in the first half of next year, Credit Suisse said.
However, its sales outlook remains unclear for the second half of next year.
“Overall notebook shipments should be difficult to further grow in 2021, after a higher 2020 base, while graphics card sales could continue to grow on new product launches,” Credit Suisse said.
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