Elan Microelectronics Corp (義隆電子), which designs chips used in PC touch pads and touch screens, yesterday said revenue would plummet about 30 percent sequentially this quarter as customers scale back orders due to sagging computer demand and excess inventory.
The company said growth momentum for commercial notebook computers began to ebb in the second half of this year, as enterprises cut spending amid soaring inflation and economic headwinds.
As customers are stepping up efforts to reduce channel inventory, especially touch pads used in Chromebooks, the overall inventory level is expected to return to normal in the first half of next year, Elan said.
Photo: Wang Jung-hsiang, Taipei Times
Sales of Chromebooks more than halved to 6 million units last quarter from 12.3 million units a year earlier, International Data Corp data showed.
“The sales of notebook computers fell short of our expectations due to sagging market demand amid macroeconomic [uncertainties],” Elan spokesman Dennis Liu (劉代銘) said. “All products lines are to see quarterly declines during the third quarter, with touch screen sales taking a bigger hit.”
Elan is conservative about this quarter’s revenue outlook, expecting sales of between NT$2.8 billion and NT$3 billion (US$93.35 million and US$100 million), representing a decline of 27.71 to 32.53 percent from NT$4.15 billion last quarter.
The fourth quarter would be better as customers’ demand recovers, Elan said, adding that it could revise its outlook given shorter order visibility and dynamic market changes.
Commenting on the escalating tensions across the Taiwan Strait, Liu said any geopolitical tensions or war would have an enormous impact on supply chains and the scale would be global as Taiwan and China supply most of the world’s consumer electronics.
This quarter, gross margin is likely to stay between 46 and 48 percent, compared with 47.5 percent last quarter, thanks to higher shipments of better high-margin products, such as haptic touchpads, which sell for up to 10 times as much as conventional products, Elan said.
There is a slim chance that customers would cut prices, given higher material and manufacturing costs, Elan chairman Yeh I-hau (葉儀皓) said.
Foundry costs have remained high, with only one Chinese foundry service provider cutting prices to previous levels, he said.
Elan reported that net profit last quarter dropped 1.75 percent quarterly and more than 40 percent annually to NT$761 million due to slumping demand for Chromebooks. That marked the weakest quarterly profit in about nine quarters.
Earnings per share dropped to NT$2.75 from NT$2.81 in the first quarter and NT$4.53 a year earlier.
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