Shares of Elan Microelectronics Corp (義隆電子) yesterday tumbled 4.22 percent after the chip designer gave a gloomy financial forecast for this quarter given weaker-than-expected demand for notebook computers and penalties for not exercising a contract signed with its chip supplier.
As customer demand has weakened significantly, Elan said it opted not to honor a three-year chip supply agreement with a foundry service provider, making it the nation’s first chip designer to default on a chip supply contract.
During the height of the chip crunch in the past two years, many chip designers signed long-term supply agreements with foundry service providers to secure supply.
“Customers have become extraordinarily conservative at this point, even though some of them have managed to lower their inventory compared with the same period last year,” Elan chairman Yeh I-hau (葉儀皓) said. “Our orders from Chromebook makers are only half of that last year.”
As customer demand dipped, Elan chose to default on the supply contract and book the full penalty this quarter, Yeh said.
Elan’s stock price sank to NT$79.50 yesterday, underperforming the TAIEX, which gained 0.31 percent.
Commenting on customers’ inventory digestion, Yeh said most Windows-based PC makers are expected to complete their inventory correction at the end of this year, but Chromebook makers would take a longer time — likely the first or second quarter of next year.
“We hope the fourth quarter would be the worst period,” Yeh said.
Revenue is forecast to plunge sequentially between 29 percent and 38 percent to between NT$1.8 billion and NT$2 billion (US$55.9 million and US$62.1 million) this quarter from NT$2.82 billion last quarter.
Three months ago, Elan, which designs chips for PC touch pads and laptop touch screens, expected revenue to pick up this quarter after a 32 percent sequential decline last quarter.
“However, we saw purchasing sentiment worsen, with PC brands cutting their sales forecast because of weak consumer demand, which slowed inventory digestion,” Elan spokesman Dennis Liu (劉代銘) told investors during an online meeting on Thursday.
“All of our product lines have shown weak momentum in the fourth quarter compared with the third quarter,” he said.
Gross margin is forecast to range from 45 percent to 47 percent this quarter, compared with 46 percent last quarter, as demand for high-margin touch screens drops, Liu said.
Operating margin is expected to plunge to between 3.6 percent and 9.8 percent this quarter, from 18.9 percent last quarter. That meant Elan’s bottom line might approach the break-even point this quarter.
Last quarter, Elan reported that net profit contracted 33 percent to NT$522 million from NT$784 million in the third quarter. That represented an annual decline of 62 percent from NT$1.32 billion.
Earnings per share fell to NT$1.83 last quarter, from NT$2.75 in the second quarter and NT$4.7 in the third quarter last year.
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
RSS