Rockchip's Q1 net profit increased by 210.46% to 266.59% year-on-year. Will its production capacity meet demand?

According to Jiwei.com news on the evening of April 6, according to Rockchip's first quarter 2021 performance forecast, Rockchip Electronics Co., Ltd. (hereinafter referred to as the "Company") expects its operating income in the first quarter of 2021 to be 560 million to 570 million yuan, compared with 270.7794 million yuan in the same period last year, a year-on-year increase of 106.81% to 110.50%.

The net profit attributable to shareholders of the listed company is RMB 99 million to RMB 116.9 million, an increase of 210.46% to 266.59% compared with RMB 31.8882 million in the same period last year. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses is expected to be RMB 71.9 million to RMB 83.9 million, an increase of 159.45% to 202.76% compared with RMB 27.7120 million in the same period last year.

As for the reasons for the performance growth, Rockchip said:

(1) The epidemic has accelerated the development of the digital economy, and the market demand for the downstream application areas of the Company's products is strong. In particular, the field of artificial intelligence Internet of Things (AIoT), which the Company has been working on for many years, has grown rapidly, driving a substantial increase in the sales of the Company's chip products.

(II) Non-recurring gains and losses mainly include recognition of government grant income and increase in fair value of the Company’s overseas investments.

In addition, Rockchip also emphasized that during the reporting period, under the tight supply chain of the global integrated circuit industry, there is an uncertain risk as to whether the production capacity of wafer foundries and packaging and testing plants can guarantee procurement demand. In addition, if demand grows too fast and production capacity increases too little, there will also be a risk of shortage of production capacity of wafer foundry production and packaging and testing plants, so there is uncertainty as to whether the company can meet customer needs.