Alchip Technologies (3661) Q2 2024 earnings summary

Executive summary

• Achieved record-breaking Q2 2024 results with revenue of TWD 421 million, net income of TWD 49.3 million, and EPS of TWD 20.03, driven by strong AI ASIC shipments to major North American customers.

• 91% of Q2 revenue and 92% of 2024 YTD sales are from HPC, especially AI, with North America contributing 78% of Q2 revenue.

• Company remains a leading AI ASIC service provider, with strong ties to TSMC and a focus on advanced process nodes (7nm, 5nm, 3nm).

• 5nm AI accelerator shipments to a North American IDM customer began ramping up late in Q2 2024.

• 2024 Employee Stock Option Plan approved, authorizing up to 200,000 new shares for employee incentives.

Financial highlights

• Q2 2024 revenue: TWD 421 million (up 26.2% QoQ, 62.8% YoY); net income: TWD 49.3 million (up 26.3% QoQ, 105.8% YoY); EPS: TWD 20.1.

• Gross margin in Q2 2024 was 19%, with gross profit at TWD 79.8 million.

• Operating income for Q2 2024 was TWD 51.2 million, up 32.8% QoQ.

• Non-operating income mainly from interest income, stable QoQ.

• 2023 revenue reached NT$30,481,576 thousand, up 122% YoY; net income was NT$3,320,516 thousand, up 81% YoY.

Outlook and guidance

• AI and data center demand remains robust, with substantial revenue growth expected for 2024 and continued growth in 2025.

• 7nm AI chip shipments to the largest customer will decline in 2025 as the product reaches end of life; 5nm AI accelerator shipments ramping up and expected to be the top contributor in 2025.

• Targeting over 20% annual revenue growth, contingent on supply chain and capacity improvements.

• NRE revenue growth expected to outpace production growth in 2025, supporting gross margin improvement.

• Management expects continued sales and profit growth, driven by new product launches, R&D, and customer expansion.