Novatek Microelectronics (3034) investor relations material

Executive summary

• Q1 revenue reached TWD 23.15 billion, up 1.4% quarter-over-quarter but down 14.7% year-over-year, driven by SOC and large display driver IC growth despite weak smartphone demand.

• Net income for Q1 was TWD 3.77 billion, up 2.1% quarter-over-quarter but down 28.4% year-over-year.

• SOC business accounted for 44% of Q1 revenue, a historical high, while small/medium drivers declined to 33% and large drivers rose to 23%.

• EPS for Q1 was TWD 6.19, up TWD 0.12 sequentially but down TWD 2.46 year-over-year.

• April revenue was TWD 9.23 billion, up 1.16% sequentially and 8.93% month-over-month; SOC share hit a record 53.7%.

Financial highlights

• Q1 gross margin was 39.06%, exceeding guidance and up 87 bps sequentially, mainly due to favorable product mix and selective ASP adjustments.

• Operating income for Q1 was TWD 4.03 billion, up 4.3% sequentially but down 29.3% year-over-year.

• Cash at Q1 end was TWD 48.92 billion, up 15.32% sequentially but down 8.10% year-over-year.

• Inventory at Q1 end was TWD 10.85 billion, up 25.58% sequentially and 13.05% year-over-year; inventory days rose to 74 from 59 in Q4.

• Non-operating income in Q1 was TWD 362 million, mainly from interest income (TWD 228 million) and forex gain (TWD 84 million).

Outlook and guidance

• Q2 revenue guidance: TWD 27.5–28.5 billion, up 19–23% quarter-over-quarter, with gross margin 38–41% and operating margin 16–19%.

• All three major product lines expected to see significant Q2 growth, with SOC leading due to edge AI demand.

• Full-year revenue expected to grow year-over-year, supported by new high-end product launches in edge AI, OLED TDDI, and gaming monitors.

• Tax rate guidance for 2026 remains at 16–17%.

• Monthly sales in Q1 2026 showed a year-over-year decline, with January down 10%, February down 24%, and March down 10%.