Novatek Microelectronics Corp (聯詠), which designs display drive integrated circuits used in TVs and PCs, expects revenue growth to moderate this quarter due to a weakening demand for electronics in China and the ebbing front-loading demand ahead of the imposition of US tariffs.
Revenue is expected to grow 4 percent sequentially at best to US$866 million this quarter, Novatek president Steve Wang (王守仁) told an online earnings conference yesterday.
In New Taiwan dollar terms, revenue would increase as high as 2 percent sequentially to NT$27.7 billion (US$914.3 million), following a 7.35 percent rise last quarter, he said.
Photo: Grace Hung, Taipei Times
Wang attributed the mild growth to increasing demand for chips used in mobile devices.
“During the second quarter, China is letting up its subsidy program, while customers’ pull-in demand to cope with reciprocal tariff is slowing down,” Wang said. “Similarly, customers’ demand is weakening due to the tariffs’ effect.”
Novatek is closely monitoring how the tariff policy evolves and how it would weigh on consumers’ appetite for electronic devices, he said.
The recent volatility in the NT dollar’s exchange rates is worth noticing, the company said, adding that every 1 percent appreciation of the NT dollar against the US dollar would reduce its net income by about 0.2 percent.
The NT dollar has risen 7.83 percent to NT$30.295 versus the greenback since Jan. 2.
Gross margin this quarter is estimated to be between 37 percent and 40 percent, compared with 39.76 percent last quarter, Novatek said.
The company’s new organic light-emitting diodes (OLED) for touch and display driver integration (TDDI) chips were the focus of investors yesterday amid reports that the new chips are used in Apple Inc’s iPhones.
Novatek said its new OLED TDDI chips had been adopted by its customers for new smartphones launched last month.
Customers are looking at applying such new OLED TDDI chips for more models, Wang said.
However, business visibility for the second half remains unclear, Wang said, citing tariff uncertainty and the volatility of foreign exchange rates.
Novatek does not directly ship any products to the US, but it has about 17 percent of its total revenue exposed to the US market indirectly, Wang said, with products for notebook computers, automotive and TV-related products accounting for a higher percentage.
The company has not seen any abnormal changes in shipments so far as customers behave normally, he added.
Novatek’s net profit in the first quarter expanded 7.96 percent annually and 9.63 percent quarterly to NT$5.26 billion. Earnings per share rose to NT$8.65, from NT$8.04 one year ago and NT$7.89 one quarter earlier.
Gross margin rose to 39.76 percent from 39.51 percent in the prior quarter, but declined from 41.09 percent one year ago.
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