Semiconductor company Q3 financial report summary: SK Hynix's profit surged 400%

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At the end of October, it is time for major semiconductor companies to release their financial reports. Thanks to the good performance of the component market in the past year, semiconductor companies have really made a lot of money in the past few days. Especially in the peak period of mobile phone shipments in the past two months, the financial reports of many semiconductor companies have really risen steadily. Let's take a look at the financial reports of well-known semiconductor companies:

Beijing time, October 27, Intel Corporation today announced its third quarter financial report for fiscal year 2017 ending September 30. The financial report shows that based on US Generally Accepted Accounting Principles (GAAP), Intel's third quarter net revenue was US$16.149 billion, a 2% increase from US$15.778 billion in the same period last year; net profit was US$4.516 billion, compared with US$3.378 billion in the same period last year, a year-on-year increase of 34%.

Net revenue: Intel's third-quarter net revenue was US$16.149 billion, compared with US$15.778 billion in the same period last year, an increase of 2% year-on-year.

Net profit: Based on US GAAP, net profit was $4.516 billion, compared with $3.378 billion in the same period last year, a year-on-year increase of 34%. Intel's diluted earnings per share in the third quarter were $0.94, compared with $0.69 in the same period last year, a year-on-year increase of 36%.

Based on non-GAAP, net profit was $4.848 billion, compared with $3.886 billion in the same period last year, a year-on-year increase of 25%. Intel's third-quarter diluted earnings per share were $1.01, compared with $0.80 in the same period last year, a year-on-year increase of 26%.

Operating profit: Based on GAPP, operating profit was US$5.1 billion, compared with US$4.5 billion in the same period last year, an increase of 15% year-on-year; based on Non-GAAP, operating profit was US$5.6 billion, compared with US$5.1 billion in the same period last year, an increase of 8% year-on-year.

Gross profit margin: Based on GAPP, the gross profit margin in the third quarter was 62.3%, compared with 63.3% in the same period last year, a year-on-year decrease of 1 percentage point. Based on Non-GAAP, the gross profit margin in the third quarter was 63.9%, compared with 64.8% in the same period last year, a year-on-year decrease of 0.9 percentage points.

Tax rate: Based on GAPP, the tax rate in the third quarter was 23.8%, compared with 21.8% in the same period last year, an increase of 2 percentage points year-on-year. Based on Non-GAAP, the tax rate in the third quarter was 23.8%, compared with 21.8% in the same period last year, an increase of 2 percentage points year-on-year.

Cash and Dividends: Intel generated approximately $6.3 billion in cash from operating activities in the third quarter, paid dividends totaling $1.3 billion to shareholders, and repurchased 31 million shares for a total of $1.1 billion.

By business unit

Client Computing Group: Net revenue was US$8.86 billion, compared with US$8.892 billion in the same period last year, basically flat year-on-year; operating profit was US$3.60 billion, compared with US$3.327 billion in the same period last year, an increase of 8% year-on-year.

Data Center Group: Net revenue was US$4.878 billion, compared with US$4.542 billion in the same period last year, a year-on-year increase of 7.4%; operating profit was US$2.255 billion, compared with US$2.110 billion in the same period last year, a year-on-year increase of 6.9%.

Internet of Things Group: Net revenue was US$849 million, compared with US$689 million in the same period last year, a year-on-year increase of 23%; operating profit was US$146 million, compared with US$191 million in the same period last year, a year-on-year decrease of 23.5%.

Non-Volatile Storage Solutions Group: Net revenue was US$891 million, compared with US$649 million in the same period last year, a year-on-year increase of 37%; operating loss was US$52 million, compared with US$134 million in the same period last year, a year-on-year reduction of 61%.

Programmable Solutions Group: Net revenue was US$469 million, compared with US$425 million in the same period last year, a year-on-year increase of 10%; operating profit was US$113 million, compared with US$78 million in the same period last year, a year-on-year increase of 45%.

All other segments: Net revenue was $202 million, compared with $581 million in the same period last year; operating loss was $947 million, compared with an operating loss of $1.11 billion in the same period last year.

Performance Outlook

Fourth quarter 2017: Based on GAAP, Intel expects fourth quarter net revenue to be $16.3 billion, plus or minus $500 million; gross margin to be 61%, plus or minus two percentage points; operating profit to be $4.8 billion, with a tax rate of 22% and diluted earnings per share to be $0.80, plus or minus 5 cents.

Based on Non-GAAP, net revenue was $16.3 billion, with a fluctuation of $500 million; gross profit margin was 63%, with a fluctuation of two percentage points; operating profit was $5.2 billion, the tax rate was 22%, and diluted earnings per share were $0.86, with a fluctuation of 5 cents.

Full Year 2017: Based on GAAP, Intel expects full-year revenue of $62 billion, plus or minus $500 million; operating profit of $17.3 billion, diluted earnings per share of $2.93, plus or minus 5 cents, and full-year capital expenditures of $11.5 billion.

Based on Non-GAAP, full-year revenue was $62 billion, with a fluctuation of $500 million; operating profit was $18.8 billion, diluted earnings per share were $3.25, with a fluctuation of 5 cents; and full-year capital expenditure was $11.5 billion.

On October 26, according to foreign media reports, South Korean chipmaker SK Hynix released its third-quarter financial report today. The report shows that SK Hynix's Q3 net profit increased by 411% year-on-year to 305.6 billion won (about US$2.7 billion).

SK Hynix operating data

SK Hynix's revenue in the third quarter reached 8.1 trillion won, a year-on-year increase of 91%.

SK Hynix's third-quarter operating profit increased 415% to 3.7 trillion won (about US$3.28 billion) from 726 billion won in the same period last year.

Analysts said SK Hynix's good performance in the third quarter was due to a simultaneous increase in D-RAM chip shipments and average selling prices, while the average selling price of NAND flash memory fell 3% month-on-month, but shipments increased 16%.

SK Hynix expects growing demand for D-RAM and NAND flash memory in the fourth quarter. The company plans to mass-produce 10nm-class D-RAM and 72-layer NAND flash memory in the fourth quarter, and its performance will continue to improve next year.

"The company will focus on servers and mobile devices, which are expected to lead market demand," SK Hynix said in a statement.

Research firm Gartner predicts that the memory chip industry's overall revenue may reach a record $126 billion this year, may further increase to $130 billion in 2018, and will fall to around $115 billion in 2019.

Texas Instruments recently announced its third quarter financial report for fiscal year 2017 ending September 30. The report shows that the company's revenue for the quarter was US$4.116 billion, compared with US$3.675 billion in the same period last year, a year-on-year increase of 12%; according to US Generally Accepted Accounting Principles (GAAP), the net profit attributable to the listed part of the company was US$1.285 billion, compared with US$1.018 billion in the same period last year, a year-on-year increase of 26%; the diluted earnings per share were US$1.26, compared with US$0.98 per share in the same period last year, a year-on-year increase of 29%.

As of the end of the quarter, the company had cash and cash equivalents totaling $1.296 billion, compared with $1.369 billion at the end of last year.

Performance of each department:

Simulation: Revenue was US$2.698 billion, compared with US$2.323 billion in the same period last year, a year-on-year increase of 16%; operating profit was US$1.268 billion, compared with US$957 million in the same period last year, a year-on-year increase of 32%.

Embedded Processing: Revenue was $931 million, compared with $795 million in the same period last year, a year-on-year increase of 17%; operating profit was $325 million, compared with $224 million in the same period last year, a year-on-year increase of 45%.

Others: Revenue was US$487 million, compared with US$557 million in the same period last year, a year-on-year decrease of 13%; operating profit was US$195 million, compared with US$227 million in the same period last year, a year-on-year decrease of 14%.

AMD recently released its third quarter financial report for fiscal year 2017. The report shows that AMD's third quarter revenue was $1.64 billion, higher than $1.31 billion in the same period last year and $1.22 billion in the previous quarter; net profit was $71 million, compared with a net loss of $406 million in the same period last year and a net loss of $16 million in the previous quarter. AMD's third quarter performance exceeded Wall Street analysts' previous expectations, and it raised its full-year performance outlook for fiscal year 2017, but the company expects fourth quarter revenue to decline quarter-on-quarter, and its stock price plummeted by more than 10% after the market.

In the quarter ended September 30, AMD's net profit was $71 million, with earnings per share of $0.07, which was better than the same period last year. In the third quarter of fiscal 2016, AMD's net loss was $406 million, with a loss per share of $0.50. Excluding certain one-time items (not in accordance with US generally accepted accounting principles), AMD's adjusted net profit in the third quarter was $1.10, compared with an adjusted net profit of $27 million in the same period last year; adjusted earnings per share were $0.10, compared with an adjusted earnings per share of $0.03 in the same period last year, which exceeded analysts' previous expectations. According to a survey by financial information provider FactSet, analysts on average expected AMD's third-quarter earnings per share to be $0.08.

AMD's third-quarter revenue was $1.64 billion, up from $1.31 billion in the same period last year and $1.22 billion in the previous quarter, also exceeding analysts' expectations. According to a FactSet survey, analysts on average expected AMD's third-quarter revenue to be $1.51 billion.

By business unit, AMD's revenue from the computing and graphics division in the third quarter was $819 million, up from $472 million in the same period last year and $659 million in the previous quarter; operating profit was $70 million, compared with an operating loss of $66 million in the same period last year and an operating profit of $7 million in the previous quarter. AMD's revenue from enterprise, embedded and semi-custom businesses in the third quarter was $824 million, down from $835 million in the same period last year, but up from $563 million in the previous quarter; operating profit was $84 million, down from $136 million in the same period last year, but up from $42 million in the previous quarter. AMD's operating loss from all other businesses in the third quarter was $28 million, compared with an operating loss of $363 million in the same period last year and an operating loss of $24 million in the previous quarter.

AMD's third-quarter operating profit was $126 million, compared with an operating loss of $293 million in the same period last year and an operating loss of $25 million in the previous quarter. Excluding certain one-time items (not in accordance with US generally accepted accounting principles), AMD's third-quarter adjusted operating profit was $155 million, compared with an adjusted operating profit of $70 million in the same period last year and an adjusted operating profit of $49 million in the previous quarter.

According to US GAAP, AMD's gross margin in the third quarter was 35%, up 30 percentage points year-on-year and 2 percentage points quarter-on-quarter. Not in accordance with US GAAP, AMD's gross margin in the third quarter was also 35%, up 4 percentage points year-on-year and 2 percentage points quarter-on-quarter.

AMD expects revenue to decline by about 15% in the fourth quarter of fiscal 2017, plus or minus 3 percentage points, and to grow by about 26% year-on-year at the midpoint. AMD also predicts that revenue growth for the full year 2017 will be more than 20%, compared with the previous expectation of a mid- to high-end range of 10% to 19%.

According to data from the US financial website MarketWatch, AMD's expected fourth-quarter revenue range is equivalent to US$1.34 billion to US$1.44 billion, with a median of US$1.39 billion, exceeding analysts' expectations. According to a FactSet survey, analysts on average expected AMD's fourth-quarter revenue to be US$1.34 billion.

On the same day, AMD's stock price rose by $0.15 in regular trading on the Nasdaq, closing at $14.25, an increase of 1.06%. In the subsequent after-hours trading ending at 17:10 Eastern Time (5:10 Beijing Time on the 25th), AMD's stock price fell by $1.49 to $12.76, a drop of 10.46%. In the past 52 weeks, AMD's highest price was $15.65 and its lowest price was $6.22.

NXP Semiconductors, a major automotive chip manufacturer, announced on Wednesday that its third-quarter revenue (ending October 1) reached US$2.39 billion, an 8% increase from the previous quarter but a 3% decrease from the same period last year.

NXP said that the reason for the lower revenue than last year was the sale of its standard products business in the first quarter of this year. As for the high-performance mixed-signal (HPMS) product division, its revenue increased by 9% year-on-year to US$2.29 billion.

Operating profit for the quarter was $735 million, up 18% from the previous quarter and 6% from the same period last year. Non-GAAP operating profit margin was 30.8%, up 280 basis points from the same period last year.

NXP sold its shares to Qualcomm for $110 per share last year, totaling $38 billion. The case is still under review by the European Union. CFO Richard Clemmer said that despite the tight schedule, he expects the case to be approved in early 2018.

Last quarter, Samsung surpassed Apple to become the world's most profitable company that quarter.

Samsung's third-quarter profit was still better than expected due to strong demand for panels and chips. Apple may have contributed to this. Some analysts believe that even if the iPhone X (which purchased a large number of OLED panels from Samsung) sells well, Samsung may still be the ultimate winner.

Samsung's preliminary earnings report released on Friday showed that its operating profit nearly tripled to a record 14.5 trillion won (about $12.8 billion) in the three months ending September this year, beating the average analyst estimate of 14.3 trillion won reported by Bloomberg. Revenue for the third quarter was also in line with expectations, reaching 62 trillion won.

As the world's largest memory chip maker, Samsung delivered record results in the last quarter. This is because computer servers and artificial intelligence-driven devices have increased demand for semiconductors, further driving up the prices of DRAM and NAND. Samsung, located in Suwon, South Korea, mainly supplies chips to smartphone manufacturers and data center operators.

"It is chip prices, not sales volume, that are driving Samsung's profit growth," said Park Kang-ho, an analyst at Daishin Securities. "We expect Samsung's operating profit to reach 16 trillion won in the next quarter, which means the semiconductor industry boom is better than expected."

Samsung's stock price fell less than 1% in Seoul after the preliminary results were released. Samsung's stock price has risen by more than 50% this year.

Samsung has launched two flagship models this year, the S8 and Note 8, to make up for the losses caused by the "burning and explosion" of the Note 7 last year. If Apple fails to deliver the iPhone X as planned, Samsung's profit is likely to be very large.

At present, the sufficient supply of iPhone X seems not optimistic. Jeff Pu, an analyst at Yuanta Investment Consulting, today lowered his forecast for iPhone X supply this year again, from 40 million to 36 million. This is the second time he has revised his forecast data. Earlier this year, he estimated that the supply of iPhone X was about 45 million units.

Samsung is also a major producer and supplier of next-generation display screens, known as organic light-emitting diode displays, controlling more than 90 percent of the global market, supplying not only Apple but also Chinese companies such as Huawei.

In addition, Samsung also plans to release a foldable phone to narrow the innovation gap with Apple and cope with competition from Huawei, OPPO and other Chinese mobile phone manufacturers. DJ Koh, head of Samsung's mobile phone business department, also admitted that the Galaxy X is already under development and said it is very likely to be released in 2018.

In addition to panels and mobile phones, strong market demand for memory chips has also led to a good performance in Samsung's chip business. According to data from inSpectrum Tech Inc, in September this year, the contract price of 32G DRAM server modules rose 7.2% from June, while the price of 128G MLC NAND flash memory chips rose 4.7% during the same period.

“Resilient memory chip prices will likely be the biggest driver of revenue growth,” said Anthea Lai, an analyst at Bloomberg Intelligence.

It can be seen that the popularity of the storage industry has boosted the performance of Samsung and SK Hynix, but traditional giants Intel and Texas Instruments have also performed well. Especially Texas Instruments has been steadily rising after focusing on industry and automobiles. It can be seen that for semiconductor companies, good technology is important, but if they cannot face the right market, they will also be difficult to move forward.

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