Novatek Microelectronics Corp (聯詠) yesterday reported better-than-expected net income for last quarter, thanks to rush orders for driver ICs used in TVs and robust demand for OLED display driver ICs for smartphones.
The Hsinchu-based chipmaker expects growth momentum to extend into this quarter, due to growing demand for display driver ICs used in high-end notebook computers and gaming PC monitors, as customers replenish inventory.
“Starting in March, we are seeing rush orders coming in, especially chips used in upscale notebook computers and information technology products,” Novatek president Steven Wang (王守仁) told an online investors’ conference yesterday.
Photo: Grace Hung, Taipei Times
“The first quarter will be better than we expected,” Wang said.
Revenue would be “flattish,” or increase slightly on a sequential basis, which would be better than what is typical for the season, he said.
Novatek said there is a good chance of improved business next quarter, as the company’s new chips are to enter volume production and customers aim to roll out new products.
The chip designer expects China’s reopening, improving global inflation and softening monetary policies to help spur demand for consumer electronics in the second half of this year.
The first quarter is still a low season for the electronics industry, as the Lunar New Year holiday resulted in fewer working days, Novatek said, adding that customers are still grappling with inventory backlogs as demand for consumer electronics — smartphones in particular — remains sluggish.
Revenue this quarter is expected to be between NT$22.2 billion and NT$23.2 billion (US$738.94 million to US$772.23 million), Wang said.
Small display driver ICs would be the only segment experiencing another quarterly decline, he said.
Novatek made NT$22.42 billion last quarter, surpassing the company’s estimate of NT$22 billion, Wang said.
Novatek’s revenue for last month was an early indicator.
The company yesterday reported that revenue dropped 7.02 percent to NT$7.22 billion last month from NT$7.77 billion in December last year. That represented a decline of 41.26 percent from NT$12.32 billion a year earlier.
Gross margin this quarter is expected to drop to 37.5 to 39.5 percent from 40.55 percent last quarter, following a dip of 2.1 percentage points from 42.65 percent in the third quarter, which was attributable to a decline in average selling prices and higher inventory costs, Novatek said.
Starting next quarter, gross margin would improve quarter-on-quarter for the remainder of the year, Wang said.
During the fourth quarter of last year, net income plummeted 63.02 percent annually, or 6.09 percent quarter-on-quarter, to NT$4.04 billion, from NT$10.93 billion in the fourth quarter of 2021 and NT$4.31 billion in the third quarter of last year, the company said.
Last quarter’s net income was the lowest it has been in about seven quarters.
For last year as a whole, Novatek reported that net income contracted 28.04 percent to NT$27.97 billion from NT$38.87 billion in 2021. Earnings per share sank to NT$45.96 from NT$63.87.
Despite the sharp decline, Novatek said that it still aims to pay 80 percent of its earnings to shareholders in the form of cash dividends as it did over the past few years.
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