MEC Company, the Taiwan-based compound semiconductor manufacturer, achieved record first-quarter revenue despite reporting a net loss due to convertible bond valuation issues.
The company posted revenue of NT$270 million (US$8.5 million) in Q1, up 43.19% year-on-year. Gross margin reached 34.68%, its highest level since Q2 2022. Despite operational profitability, MEC reported a net loss of NT$59.7 million due to fair-value assessment of its convertible bonds.
CEO Kao Yung-chung said the company would have recorded a net profit of NT$46.9 million without the CB-related losses. These bonds have since been almost completely converted and delisted in April, eliminating this drag for future quarters.
The firm faces near-term challenges from China’s February export restrictions on indium and other rare metals. China announced controls on indium phosphide, trimethylindium, and triethylindium in early February, creating supply constraints for the substrates MEC needs for its PIN, HBT, and APD products.
“We’re working with customers on certifying new indium phosphide substrate suppliers,” Kao said during the investor conference. He noted that while some product lines face temporary constraints, the company’s production of indium phosphide wafers continues with relatively normal substrate supply.
Looking ahead, Kao expects Q2 performance to remain stable or slightly higher than Q1, barring significant currency fluctuations. He also dismissed concerns about President Trump’s tariff threats, noting that while 80% of the company’s business is in the US market, MEC serves as a sole-source supplier for many products, limiting potential disruption.
Market analysts remain optimistic, maintaining forecasts that MEC will achieve record-high annual revenue in 2025.
