Alchip Technologies (3661) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue was TWD 132.4 million (NT$4,186.9 million/US$132.4 million), down 13.3% quarter-on-quarter and 58–60% year-on-year, mainly due to a postponed tape-out milestone.

• Net income for Q1 2026 was TWD 45.1 million (NT$1,427.9 million/US$45.1 million), down 5.7–6% quarter-on-quarter but up 1.6–2.4% year-on-year.

• Gross margin reached/exceeded 50%, driven by strong NRE demand, favorable revenue mix, and lower operating costs.

• Automotive business entered volume production, expected to ramp in Q2 and become a top revenue contributor in H1.

• Majority of design resources now located outside China, with aggressive hiring in Japan, Malaysia, and Vietnam to mitigate geopolitical risks.

Financial highlights

• Operating income for Q1 was TWD 43.2 million, up 10.5% quarter-on-quarter but down 4.8% year-on-year.

• Gross profit increased 3.2% quarter-on-quarter to $66.4M, but down 10% year-on-year.

• Operating expenses decreased 8% quarter-on-quarter and 18.4% year-on-year.

• Cash and cash equivalents at March 31, 2026 were NT$29,131.9 million (US$910.5 million), down from NT$38,262.9 million (US$1,152.3 million) a year earlier.

• HPC accounted for 70% of total revenue in Q1, with expectations for this share to rise.

Outlook and guidance

• Q2 revenue expected to be higher than Q1, with significant ramps in Q3 and Q4, driven by N3 AI accelerator shipments.

• Revenue momentum anticipated to continue into late next year, with mass production of next-gen chips and N2 accelerator project tape-out by year-end.

• Gross margin expected to trend down as production revenue increases, but NRE pipeline remains strong, especially in North America.

• The board proposed a cash dividend of NT$34.41 per share for 2025, pending shareholder approval.

• Management continues to assess the impact of new IFRS standards and Pillar Two tax rules, with no material effect expected in the near term.