Asustek Computer Inc (華碩), the world’s No. 5 PC vendor, yesterday reported an 87 percent slump in net profit for last year, dragged by a massive overdue payment from an Indian cloud service provider.
The Indian customer has delayed payment totaling NT$5.35 billion (US$162.7 million), Asustek chief financial officer Nick Wu (吳長榮) told an online earnings conference.
Asustek shipped servers to India between April and June last year.
Photo: Ritchie B. Tongo, EPA-EFE
The customer told Asustek that it is launching multiple fundraising projects and expected to repay the debt in the short term, Wu said.
The Indian customer accounted for less than 10 percent to Asustek’s total server revenue last year, he said.
Asustek’s net profit last quarter plummeted to NT$1.64 billion, compared with NT$12.5 billion in the previous quarter.
That represented an annual drop of 58 percent from NT$3.93 billion.
Earnings per share sank to NT$2.2 last quarter, from NT$16.8 in the previous quarter and NT$5.3 a year earlier.
The company’s operating margin missed its guidance, dipping to 0.7 percent last quarter due to the bad debts, from 7.1 percent in the third quarter and 2.1 percent in the fourth quarter last year.
Excluding the bad debts, its operating margin would have met its forecast of 4.5 percent, Wu said.
“We are confident that the company’s operating margin would rebound to between 4 percent and 5 percent for the full year,” Asustek co-CEO Samson Hu (胡書賓) said.
The first quarter of this year would be the trough since the PC market is undergoing a major shift to new platforms, such as Microsoft Corp’s new Windows 11 operating system and Nvidia Corp’s new RTX50 graphics processing unit series, Hu said.
That would be followed by a gradual improvement in the following quarters this year, he added.
Due to the platform adjustment, Asustek expects PC revenue to contract 20 percent sequentially this quarter, before expanding 30 percent next quarter, Wu said.
Revenue from its components, primarily motherboards and servers, is expected to drop 10 percent sequentially this quarter before rebounding 10 percent next quarter, he said.
Asustek expects its server business to make up about 15 percent of the company’s total revenue this year, up from about 11 percent to 12 percent last year, Hu said.
The introduction of low-cost artificial intelligence (AI) models by China’s DeepSeek (深度求索) would help accelerate the adoption of AI applications on edge devices such as AI PCs and stimulate demand for more AI computing power for pre-training, post-training and inferencing, given forecasts that the costs of AI models would plunge 10 times or even 100 times, he said.
“Even if post-training computing power demand should outpace that of pre-training, we do not expect demand to diminish,” Hu said, refuting concerns that the introduction of DeepSeek’s affordable AI models would reduce demand for applications powered by Nvidia’s AI chips.
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