Alchip Technologies (3661) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 results with revenue of NT$14.83 billion (TWD 459.7 million/$459.7M), net income of NT$1.79 billion (TWD 55.6 million/$55.6M), and EPS of NT$22.46, driven by strong AI/HPC demand and advanced node shipments.

• Over 90% of revenue is from HPC and AI, with a strong focus on North America and advanced process nodes (7nm, 5nm, 3nm).

• Aggressive hiring and expansion outside China, especially in Japan, Malaysia, and Southeast Asia, to support global growth.

• Gross margin improved to 19.5% in Q3 2024, attributed to higher NRE revenue and a better production mix.

• The company operates primarily in ASIC and SoC design and manufacturing, with high exposure to high-performance computing applications.

Financial highlights

• Q3 2023/2024 revenue: NT$14.83 billion (TWD 459.7 million/$459.7M), up 9.2% quarter-on-quarter and 91.1% year-on-year.

• Net income for Q3: NT$1.79 billion (TWD 55.6 million/$55.6M), up 12.8% quarter-on-quarter and 97.7% year-on-year.

• Operating income was TWD 58.4 million/$58.4M, up 14.1% quarter-on-quarter and 82.5% year-on-year.

• Gross margin for Q3: 19.5%-20%, slightly down from 24% a year ago.

• Cash and equivalents at period end: NT$19.72 billion, up from NT$6.00 billion a year ago.

Outlook and guidance

• Q4 revenue expected to decline by high single digits quarter-on-quarter, mainly due to lower 7nm AI ASIC shipments, partially offset by ramping 5nm AI accelerator shipments.

• NRE revenue projected to be strong in Q4, with gross margin expected to exceed 20%.

• For 2025, stable first half anticipated, with strong NRE pipeline and 5nm AI chip becoming the main revenue driver.

• 2026 outlook is promising, with significant production ramp and new project wins expected.

• Ongoing investments in R&D and capacity expansion to support future growth.