With more orders from Chinese and Korean customers, IP manufacturer Faraday is optimistic about rapid growth in the second half of the year

ASIC design service and silicon intellectual property (IP) manufacturer Faraday Future held an online earnings conference today (23rd). Looking ahead to the future market, General Manager Wang Guoyong said that it is expected to receive more than 100 new cases starting from 2015, and the volume is expected to gradually increase from the second half of the year.

Looking ahead to the third quarter, Faraday estimates that its consolidated revenue will increase by more than 27% quarter-on-quarter, but due to the increase in the proportion of mass production, its gross profit margin will decline to around 50%, but its full-year consolidated gross profit margin should be able to maintain last year's level of around 53%. Wang Guoyong said that he is optimistic that the recovery of NRE and the continued steady growth of mass production will drive the overall operation to heat up rapidly.

He also mentioned that domestic demand in mainland China has increased in recent years, and Faraday has been very active in developing customers. Due to the tense trade war, customers have accelerated the speed of evaluating cases and placed many urgent orders. The applications are concentrated in four types: smart meters, AIoT, SSD, and data communications.

Faraday pointed out that mass production is the main growth momentum this quarter. Applications include smart meters, PoS, high-resolution projectors, multi-function printers and factory automation. Some of these products require local solutions because they emphasize localization. In addition to cultivating customization, Faraday has also locked in cooperation with major leading manufacturers in various regions. As a result, mass production revenue in the second quarter increased by 35% quarter-on-quarter to NT$780 million (same unit below).

In terms of NRE, Faraday continues to improve the quality of its projects. Although its revenue in the first half of the year was lower than last year due to the deferred recognition of revenue, its profit was no less than last year. The key is the continuous increase in high-value design projects. Overall, even though the proportion of mass production revenue increased in the second quarter, the company's gross profit margin remained at a high level of 54.7%, which was comparable to the same period last year, due to the continuous improvement of product quality.

Regarding ASIC project acceptance, Wang Guoyong pointed out that the performance quality of mature processes has been increasing, and advanced processes have also made achievements. In the future, Faraday will rely on its complete technology blueprint and leading design service experience to make the company's ASIC project acceptance more comprehensive.

(Photo source: Zhiyuan)

Industry insiders believe that Faraday and South Korea's Samsung have cooperative design projects in the fields of artificial intelligence, Internet of Things and virtual currency, and is expected to win Samsung's 7nm process NRE project. In addition, the recent rebound in Bitcoin has driven the demand for mining machines, which will help Faraday's performance and is expected to improve product cycles and gross profit margins.

Faraday's revenue in June was NT$433 million, up 1.48% from the previous month and 3.26% from the previous year, a seven-month high. The second quarter's consolidated revenue was NT$1.22 billion, up 10.7% from the previous quarter and 10.1% from the same period last year. The gross profit margin for the quarter was 54.7%, and the net profit attributable to the parent company was NT$56 million, with basic earnings per share of NT$0.22. The cumulative revenue in the first half of the year was NT$2.31 billion, up 7.7% from the previous year, and earnings per share in the same period were NT$0.61.