Asustek Computer Inc (華碩電腦) last quarter slid into the red for the first time in four years, posting losses of NT$3.82 billion (US$123.83 million) as surging inflation and a slackening world economy depressed PC demand.
That compares with a net profit of NT$6.19 billion in the third quarter and NT$12.06 billion in the fourth quarter of 2021.
For the whole of last year, Asustek’s net profit plummeted about 67 percent to NT$14.69 billion from NT$44.55 billion in 2021.
Photo: Fang Wei-chieh, Taipei Times
The company, headquartered in Taipei’s Beitou District (北投), said PC market demand would remain extremely weak in the first half of this year, and it expects its operating margin to remain in negative territory in the first two quarters.
Sluggish consumer and corporate PC demand drove up its obsolete inventory and ineffective sales allowances, putting a squeeze on profit margins.
The company’s operating margin fell to minus-4.2 percent during the final quarter of last year, from 2.3 percent in the third quarter and 8.7 percent in the same period of 2021.
Gross margin dropped to 8.2 percent last quarter from 11.2 percent in the previous quarter and 19.6 percent in the fourth quarter of 2021.
After reducing its obsolete inventory allowance by 24 percent sequentially to NT$132.77 billion last quarter, the company expects its inventory to return to healthy levels next quarter.
The rise in inventory allowance was a major drag on the company’s financial performance last quarter, in addition to disappointing PC sales, Asustek co-CEO S.Y. Hsu (許先越) told investors at a virtual conference yesterday.
Inventory rose as the company aggressively stocked up on PC components to match its overly optimistic forecast of PC market demand, he said.
A severe component supply constraint at the time was also a factor, he added.
“End consumer demand and demand from channel distributors are still very pessimistic,” Hsu said. “However, we expect market sentiment to return to normal in the second half of this year.”
PC sales in China would serve as a key indicator, as consumers are expected to be more willing to spend after the nation’s reopening and economic stimulus measures are implemented, Hsu said.
High inflation in the US and Europe would continue to hamper spending, he added.
Asian markets made up about 47 percent of the company’s total sales last year.
Asustek expects its PC shipments to contract between 15 and 20 percent sequentially this quarter.
Shipments of motherboards and graphics cards are forecast to drop by 5 to 10 percent during the same period.
Revenue would continue to slide this quarter, before rebounding by 10 percent next quarter, the company said.
PCs contributed 64 percent to the company’s overall revenue last quarter.
“The first quarter should be the trough for the PC industry and for Asustek as well,” Asustek chief financial officer Nick Wu (吳長榮) told investors.
The company expects its operations to return to “normal” in the second half, after emerging from a “short-term abnormal period,” with gross margins bouncing back to about 15 percent based on the company’s historical trends, Wu said.
SOLID FOUNDATION: Given its decades of expertise in megatronics, manufacturing and robotics, Japan has the wherewithal to create its own AI, Jensen Huang said Nvidia Corp plans to help build an artificial intelligence (AI) tech-related ecosystem in Japan to meet demand in a country eager to gain an edge in this emerging technology. The US company will seek to partner with Japanese research organizations, companies and start-ups to build factories for AI, Nvidia CEO Jensen Huang (黃仁勳) said yesterday during opening remarks in a meeting with Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura. The company is to set up an AI research laboratory, and invest in local start-ups and educate the public on using AI, Huang said. Huang earlier this week met with Japanese Prime
Huawei Technologies Co (華為) is among a field of “very formidable” competitors to Nvidia Corp in the race to produce the best artificial intelligence (AI) chips, Nvidia chief executive officer Jensen Huang (黃仁勳) said yesterday. Huawei, Intel Corp and an expanding group of semiconductor start-ups pose a stiff challenge to Nvidia’s dominant position in the market for AI accelerators, Huang told reporters in Singapore. Shenzhen-based Huawei has grown into China’s chip tech champion and returned to the spotlight this year with an advanced made-in-China smartphone processor. “We have a lot of competitors, in China and outside China,” Huang said. “Most of our competitors
TAPPING TAIWAN? TSMC is committed to hiring locally, but circumstances might require the firm to bring in foreign workers with specialized experience, they said Arizona labor unions and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) have reached an agreement to resolve labor disputes that have dogged the chipmaker’s construction site in Phoenix, Arizona, they said in a joint statement. The new accord is the result of months of negotiations between the world’s leading chipmaker and the Arizona Building and Construction Trades Council (AZBTC), a coalition of unions with 3,000 members on site — about one-quarter of TSMC’s total construction workforce. Under the agreement, TSMC — which is investing US$40 billion in Arizona — plans to partner with unions to develop workforce training programs and maintain transparency on
Global semiconductor industry revenue is expected to grow 16.8 percent year-on-year next year, following a slump this year, largely fueled by a surge in demand for memory chips, US-based market information advisory firm Gartner Inc said on Monday. Gartner said the global semiconductor industry is forecast to generate US$624 billion in sales next year, up from US$534 billion this year, during which revenue is predicted to fall 10.9 percent amid inventory adjustments caused by weak demand. The global market for memory chips is expected to rebound next year by 66.3 percent, following a fall of 38.8 percent this year due to oversupply
RSS