Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q2 2024 was NT$127.3 billion, up 29.7% year over year.
- Gross margin improved to 48.8%, up 1.3 percentage points from a year ago.
- Operating income increased by 69.2% year over year.
- Net income for the quarter was NT$26 billion, up 62% year over year.
- MediaTek Inc (TPE:2454, Financial) continues to lead the smartphone market with strong 5G adoption.
Negative Points
- Revenue decreased by 4.6% sequentially.
- Gross margin decreased by 3.6 percentage points from the previous quarter.
- Operating income was down 22.4% sequentially.
- Net profit margin decreased by 3.3 percentage points from the previous quarter.
- EPS for the quarter was down from $19.85 in the previous quarter to $16.9 million.
Q & A Highlights
Q: Can you still maintain the full year guidance and do you see any uncertainties ahead into Q4?
A: We are maintaining our outlook for the whole year. We expect Q4 to follow a more normal seasonal pattern, with Q3 being flattish due to inventory adjustments. Our gross margin forecast remains between 46% and 48%.
Q: Can you give more details about the AI accelerator opportunities and other potential areas?
A: Business execution is on track for the second half of 2025. We are investing heavily in AI accelerators and exploring opportunities in areas like CPU and GPU compute. We have strong relationships with ecosystem players, which positions us well for future growth.
Q: How is the smartphone business performing, particularly with 5G sales?
A: We expect our mobile business to be sequentially flattish in Q3 due to inventory adjustments. However, we are confident in our flagship Dimensity 9400, which is expected to drive significant revenue growth in 2024.
Q: What is the content growth of the Dimensity 9400 compared to the 9300?
A: The Dimensity 9400 offers substantial enhancements in performance and power efficiency, with a significant increase in CPU and GPU capabilities. We expect a 40% increase in performance compared to the 9300.
Q: Can you provide an update on the automotive segment and design wins?
A: We are making good progress in the automotive segment, with several design wins in execution. Our partnership with Nvidia is on track, and we expect significant contributions from this segment in the coming years.
Q: How are you addressing the foundry cost increases and their impact on gross margin?
A: We are working to pass on the cost increases to our customers. Our gross margin guidance for this year remains between 46% and 48%, and we are confident in maintaining this range despite the cost pressures.
Q: What is the outlook for the enterprise and data center ASIC business?
A: We see a large TAM in the enterprise and data center ASIC market, and we are well-positioned to capture a significant share. Our flexible business models and strong technical capabilities give us a competitive edge.
Q: How do you see the AI smartphone replacement cycle impacting your business?
A: We are optimistic about the AI smartphone market. Our customers are rapidly adopting new AI models, and we are working closely with them to build a competitive ecosystem. The market is large, and we are well-positioned to capture significant share.
Q: What is the potential market for custom ASIC projects, and how do you recognize revenue from these projects?
A: The market for custom ASIC projects is large, and we are confident in our ability to secure profitable projects. Revenue recognition will depend on the specific terms of each project, but we expect these projects to contribute positively to our operating margin.
Q: Will tight supply of bleeding-edge nodes from TSMC be a bottleneck for growth in 2025?
A: We have secured sufficient capacity for 2025, so we do not expect supply constraints to be a bottleneck for our growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
