Networking chip designer Realtek Semiconductor Corp (瑞昱半導體) yesterday said it is positive about market demand for the rest of this year, but an industrywide supply chain capacity shortages could cap shipments.
Demand for the company’s chips, which are used in Ethernet routers, Wi-Fi, Bluetooth and switches, has shown strong growth momentum, RealTek said.
Those networking chips are used in PCs, access point routers, broadband, wireless earbuds and other applications, as work-from-home and distance-learning trends due to the COVID-19 pandemic are stimulating a broadband infrastructure upgrade, Huang said.
“PCs have become a necessity. The company has seen robust demand for chips used in notebooks, desktops and computer peripherals in the first quarter,” Realtek spokesman Huang Yee-wei (黃依瑋) told a virtual investors’ conference.
“Capacity supply is the key,” Huang said.
Some customers have opted for lower-spec components to be able to put products on the market, Huang said.
Government agencies have also slowed the purchase of networking devices, such as routers, due to tight supply of key components, he said.
The company expects no quick relief to the industrywide supply constraints until the first half of next year.
“Despite capacity constraints, we continue to see strong customer demand in the second quarter. We are cautious and yet positive about market demand,” Huang said. “The strength will carry on to the first half of next year.”
The only weakness is TV chips, which showed lukewarm growth, as demand has been curbed by a by persistent uptick in TV set prices and a severe supply crunch of key components, including driver ICs and panel displays, Huang said.
Realtek reported net profit of NT$3.06 billion (US$109.44 million) for last quarter, up 87.3 percent from NT$1.63 billion a year earlier and 11.9 percent from NT$2.63 billion in the fourth quarter of last year.
Gross margin improved to 44.8 percent from 42.2 percent a year earlier and 43 percent in the previous quarter.
The company attributed the improvement to a more favorable product portfolio, as it prioritized supply of higher-margin products.
Revenue last month contracted 3 percent from a month earlier to NT$7.81 billion due to the component shortage, but was up 41.2 percent from NT$5.53 billion a year earlier.
Cumulative revenue in the first four months of the year jumped 45.2 percent year-on-year to NT$31.15 billion from NT$21.46 billion.
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