Novatek Microelectronics Corp (聯詠), which specializes in driver ICs for displays, forecast that revenue would either be flat or increase by up to 4.4 percent sequentially to between NT$24.4 billion and NT$25.5 billion (US$752 million and US$786 million) this quarter, mainly due to restocking demand for TV chips in preparation for the shopping festival in China and global sports events, including the Paris Olympics.
“The [semiconductor] industry’s inventory has returned to healthy levels following more than one year of adjustments. Now all eyes are on how fast consumer electronics demand would pick up,” Novatek president Steve Wang (王守仁) told an online investors’ conference on Tuesday.
“As global macroeconomic uncertainty and geopolitical conflicts persist, we are seeing a slow recovery in consumer electronics demand. Since three of the world’s major international sports events, including the Paris Olympics, are around the corner, customers are restocking TV chips more actively. China’s 618 [June 18] sales promotions also help,” he said.
Photo: Grace Hung, Taipei Times
TV chips were the biggest revenue contributor last quarter, accounting for 39 percent of the total, the chip designer said.
Demand for driver ICs used in notebook computer displays would be flat this quarter, but Novatek has detected early signs of a pickup next month, and demand for driver ICs for gaming monitor displays would remain resilient, Wang said.
However, demand for driver ICs for small displays, mainly for smartphones, would remain sluggish this quarter, he said.
The company would adopt 22-nanometer technology for touch and display driver integration (TDDI) chips for OLED displays, matching customers’ specification upgrades, Wang said.
Speculation has emerged that Novatek would deploy Taiwan Semiconductor Manufacturing Co’s (台積電) 22-nanometer technology to produce TDDI for OLED displays, rather than its long-term foundry partner United Microelectronics Co (UMC, 聯電). UMC holds a 2.7 percent stake in Novatek.
The company expects a better growth momentum in the second half of this year, when it is to supply OLED display ICs to new customers, he said.
Novatek reported better-than-expected 41.09 percent gross margin last quarter, but expects the figure to slide to between 38.5 and 40.5 percent this quarter.
The company said that higher income for engineering design services for customers — known as non-recurring-engineering (NRE) income — and a better product portfolio helped boosted gross margin in the past quarter.
Novatek expects NRE income to grow this year from NT$880 million last year, thanks to rising demand for tailored-made TV chips, Wang said.
The company participated in Arm Holdings PLC’s design ecosystem in February as part of its plan to expand its application-specific IC (ASIC) business, but does not expect revenue contributions from this partnership in the near term, it said.
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