Phison Electronics Corp (群聯電子), a supplier of NAND flash memory controllers and modules, is expecting an increase in orders and market share as customers seek to secure stable supplies after major rival Silicon Motion Technology Corp (慧榮科技) accepted a takeover bid, Phison CEO Pua Khein-seng (潘健成) said yesterday.
Pua made the comments after Silicon Motion, a NAND flash controller supplier, agreed to a takeover bid of US$3.8 billion from MaxLinear Inc.
Companies that experience takeover transitions often face drastic adjustments in their workforce and operations in the first two years following the transaction.
Phison said that NAND flash memorychip makers in particular are sensitive to such volatility, which could benefit itself.
“This morning we received a couple of phone calls from major customers. They asked whether we have enough resources and workforce to take on more projects,” Pua told investors during a virtual news conference.
“I believe [the acquisition] will be a benefit to us... We will gain more market share,” he said.
As trade disputes between China and the US are unlikely to ease soon, Phison is able to accept extra business as Silicon Motion becomes a US company, Pua said.
Phison had some awareness of a deal being negotiated three months ago, and put measures in place to prepare for extra orders, such as increasing its efforts to recruit engineers, Pua said.
The deal is likely to trigger a “shuffle in the landscape” of NAND flash supply chains, he said.
Regarding why Silicon Motion accepted the offer, Pua said that it would be an “uphill effort” for a pure NAND flash controller designer to make a profit, as it requires heavy and long-standing investment in research and development (R&D), adding that Phison, the world’s No. 10 storage company, has felt that pressure.
Phison since 2014 has been increasing its R&D spending to stimulate growth. The company last quarter allocated 14 percent of its revenue to R&D, compared with 13 percent last year and 5 percent in 2014, company data showed.
Phison said its efforts have been successful, as reflected in a strong performance last quarter. Net profit surged 29.4 percent year-on-year to NT$2.19 billion (US$73.84 million) last quarter from NT$1.69 billion, marking the strongest first-quarter performance on record. That represents quarterly growth of 20.6 percent from NT$1.81 billion.
Earnings per share climbed to NT$11.09 last quarter, from NT$9.19 in the final quarter last year and NT$8.59 a year earlier.
Gross margin improved to 31.66 percent from 28.4 percent in the prior quarter and 29.4 percent one year earlier.
Revenue last month jumped 16 percent year-on-year to NT$5.9 billion, marking the best April in the company’s history, despite China’s COVID-19 restrictions having affected shipments.
That brought the company’s revenue during the period from January to last month to NT$23.01 billion, expanding 28 percent from the same period last year.
The company expects demand to pick up as the Christmas shopping season approaches, Pua said.
Year-end shopping spree demand has been pent-up for two years due to the COVID-19 pandemic, he said.
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