Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in artificial intelligence (AI) chips, yesterday said revenue would pick up significantly next year after a major customer’s 3-nanometer chip enters volume production.
Revenue has been dipping for the past four quarters as a key customer’s 5-nanometer AI accelerator is approaching the end of its lifecycle. Revenue in the third quarter sank 51.5 percent annually, or down 25 percent sequentially, to US$223 million.
The company attributed the decline to lower revenue contribution from 5-nanometer and 3-nanometer chips due to capacity shortage. Alchip counts Amazon.com Inc and Intel Corp among its customers.
Photo: Screengrab from the Alchip Technologies Web site
“We anticipate a further revenue decline this quarter,” Alchip chairman and chief executive officer Johnny Shen (沈翔霖) told an online earnings conference.
“Looking ahead, we remain highly optimistic about the AI market. From 2026 to 2029, we expect our growth to stay in line with the industry and ahead of competitors,” Shen said.
Alchip generated 79 percent of its revenue by supplying ASICs used in high-performance computing devices, such as AI servers, in the third quarter.
Revenue is likely to jump next year as a 3-nanometer chip ramps up production in the second quarter for a North American customer, Alchip chief financial officer Daniel Wang (王德善) said.
The customer has placed a large order for 3-nanometer chips from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and tried to squeeze more capacity from TSMC amid supply constraints, Wang said.
“This 3-nanometer chip revenue definitely could be a multiple-billion [dollar] business for us as a whole,” he said.
The company expects a new automotive chip, set to enter volume production later this quarter, to drive its growth next year, it said.
Alchip expects the gross margin this quarter to climb from 28 percent last quarter, thanks to growth in non-recurring engineering (NRE) income, Shen said.
NRE refers to one-time charges for chip designing and test services.
Alchip has booked NRE income from a 2-nanometer chip design project earlier this quarter and expected more to come later this quarter, it said.
The growth in NRE income would help boost this quarter’s earnings to the strongest of this year, as NRE business delivers higher gross margin than chip production business, Shen said.
Net income expanded 3.1 percent last quarter to US$44.26 million from US$42.94 million in the second quarter, ending two quarters in decline. On an annual basis, net income shrank 20.32 percent from US$55.55 million.
Earnings per share improved to NT$16.4 from NT$16.37 in the second quarter. That represents a decline from NT$22.46 a year ago.
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