Alchip Technologies (3661) Q3 2025 earnings summary

Executive summary

• Q3 revenue was TWD 223 million, down due to changes with a key customer and capacity shortages in the cryptocurrency segment, and the end-of-life for 5nm AI accelerator shipments to a major US IDM customer.

• Net income reached TWD 44.3 million, with EPS at NTD 16.4; for the nine months ended September 30, 2025, net profit was NT$4.1 billion.

• Gross margin improved by 6 percentage points quarter-on-quarter, reaching 28% in Q3, driven by a higher NRE revenue mix and disciplined cost management.

• Automotive chip business saw strong customer satisfaction and substantial wafer orders, with production to begin late in Q4.

• The company is expanding its open ecosystem strategy, collaborating with a broad range of partners for future growth.

Financial highlights

• Q3 revenue declined 25% sequentially and 51.5% year-over-year, with operating income at TWD 38.8 million, up 3.2% quarter-on-quarter but down 33.6% year-over-year.

• Net income increased 3.1% sequentially but declined 20.3% year-over-year.

• Gross margin improved to 28% in Q3, with NRE revenue contributing 30%-40% of total sales.

• HPC remains the largest revenue contributor, with nearly 90% of revenue from leading-edge process nodes (7nm, 5nm, 3nm, 2nm).

• Cash and cash equivalents increased to NT$33.3 billion as of September 30, 2025.

Outlook and guidance

• Q4 revenue is expected to decline further due to the end of the 5nm AI accelerator project and delayed ADAS project contributions.

• Gross margin is projected to improve again in Q4, driven by higher NRE revenue.

• Significant revenue growth is anticipated from Q2 next year as the 3nm accelerator project enters high-volume production.

• 2nm projects are expected to begin contributing revenue in Q4, with scale increasing in future generations.

• Management expects continued volatility in the semiconductor industry, with product life cycles subject to greater uncertainty.