Alchip Technologies Ltd (世芯), which designs application-specific ICs (ASICs) for other companies, yesterday said that it has halted shipments to Chinese semiconductor company Phytium Information Technology Co (飛騰信息技術), which could lower its revenue this year by as much as 25 percent.
Alchip said that it has put on hold all production activity originally planned for Phytium after the Chinese chip company was put onto the entity list of the US Department of Commerce’s Bureau of Industry and Security on Thursday last week, along with six other Chinese companies.
Last year, Phytium contributed a bigger share, or about 39 percent, to Alchip’s total revenue.
Photo: Reuters
The US Bureau of Industry and Security said that the seven Chinese supercomputing entities are conducting activities that are contrary to the national security or foreign policy interests of the US.
The company said that it received written assurance from Phytium that none of its products and services were for military purposes.
Even without the revenue contribution of its biggest customer, Alchip said that it remains bullish about this year’s revenue outlook, given robust customer demand.
The company said that revenue this year is likely to increase at least 20 percent, compared with annual growth last year of 71 percent to NT$7.08 billion (US$248.73 million).
Last month, the company said that it was “very confident” that it met — or even beat — analysts’ revenue projection for the year of US$320 million to US$330 million.
Yesterday, Alchip said that it might not be able to fully make up for all of the lost Phytium revenue.
The company remains “very confident that our revenue this year will grow at least 20 percent year-on-year,” Alchip chief executive officer Johnny Shen (沈祥霖) told an investors’ conference yesterday.
“We still expect good growth in terms of our top line and bottom line for this year,” Shen said. “Our design capacity is full now.”
Alchip said that its confidence is based on strong growth in the global ASIC market, which is expected to expand at a compound annual growth rate of 8.2 percent over an unspecified period.
Thirty-five design contracts have been secured, with 50 percent of the customers being outside China, the company said.
Alchip’s board of directors has discussed initiating a share buyback program to prop up its share price, but has yet to make a final decision, it said.
Since Phytium was blacklisted four trading sessions ago, Alchip’s shares have dipped 28.48 percent to close at NT$658 yesterday.
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