Alchip Technologies (3661) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 revenue of NT$14.83 billion (TWD 460 million/$459.7M), net income of NT$1.79 billion (TWD 55.6 million/$55.6M), and EPS of NT$22.46, all historical highs, driven by strong AI/HPC demand and 5nm AI accelerator ramp for North American customers.

• 91.1%–95% year-on-year and 9.2% quarter-on-quarter revenue growth; over 90% of revenue from HPC/AI applications.

• Gross margin improved to 19.5%–20% in Q3, attributed to higher NRE revenue and favorable production mix.

• Aggressive hiring and expansion outside China, especially in Japan, Malaysia, and Southeast Asia.

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

Financial highlights

• Q3 revenue: NT$14.83 billion (TWD 460 million/$459.7M), up 9.2% QoQ and 91.1%–95% YoY; net income: NT$1.79 billion (TWD 55.6 million/$55.6M), up 12.8% QoQ and 97.7%–102% YoY.

• Q3 operating income: TWD 58.4 million/$58.4M, up 14.1% QoQ and 82.5% YoY.

• Gross margin for Q3: 19.5%–20%; operating margin: 13%.

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

• EPS for Q3: NT$22.46 basic, NT$21.99 diluted.

Outlook and guidance

• Q4 revenue expected to decline by high single digits QoQ, 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%.

• 2025 outlook stable in H1, with strong NRE pipeline and 5nm AI chip as main revenue driver.

• 3nm projects expected to kick off late Q4 2024 or early 2025, with mass production in early 2026.

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