Novatek Microelectronics Corp. forecasts modest revenue growth in the second quarter as demand for OLED display drivers strengthens, despite facing headwinds from a stronger Taiwan dollar and weaker TV market.
The Taiwanese chip designer reported first-quarter earnings of NT$5.26 billion (US$164.5 million), up 9.6% from the previous quarter with earnings per share of NT$8.65. CEO Wang Shouzhen projected second-quarter revenue between NT$26.5 billion and NT$27.7 billion (US$828-866 million), representing a 2% quarter-on-quarter increase at the midpoint.
Novatek’s small and medium-sized display driver ICs are experiencing robust demand, with OLED TDDI products beginning volume shipments after a key customer launched new smartphone models in late April. The technology allows manufacturers to reduce phone thickness, increase battery capacity, and lower power consumption.
The company faces challenges from currency fluctuations, as the strong Taiwan dollar is squeezing profit margins on dollar-denominated sales. Approximately 17% of Novatek’s revenue comes indirectly from U.S. markets, primarily in laptops, automotive applications, and televisions.
Large display drivers remain a weak spot, with TV and laptop demand continuing to decline. The Hsinchu-based firm expects gross margins between 37-40% for the current quarter, potentially retreating from the 39.8% achieved in Q1.
