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Alchip Technologies Reports Record Earnings, Bolstered by Robust AI Chip Sales in North America

The surge in AI chip demand from key North American customers propels Alchip Technologies to unprecedented financial heights, despite a dip in gross profit margins
Taiwan
a 3661.TW Mid and Small Cap 2000 Semicon 75 Tech 350
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Alchip Technologies highlighted its financial performance for the fourth quarter and the entire year of 2023, showcasing a notable upsurge in fiscal health driven primarily by an increase in AI chip shipments to its main North American client. The company’s operating income reached an unprecedented 30.481 billion yuan, with a significant operating gross profit of 6.794 billion yuan and a net profit of 3.325 billion yuan. Earnings per share were reported at an impressive 45.47 yuan, underscoring the company’s strong financial position.

The financial boost was attributed to increased shipments to its largest customer and the commencement of mass production stage deliveries of AI chips to the second-largest IDM client in North America. This demand surge signifies Alchip’s substantial market presence and successful operations within the competitive AI and semiconductor industries.

However, Alchip Technologies acknowledged a nearly 10-percentage-point annual decrease in its gross profit margin, which settled at 22.3% for 2023. This decline was mainly due to the lower gross margins on products supplied to its major North American clients, along with a shift in the company’s revenue composition from high-margin commissioned designs to a larger proportion of mass production, now accounting for 70-80% of its business.

Looking forward to 2024, Alchip remains optimistic, projecting continued revenue growth driven by ongoing mass production efforts. The company is particularly enthusiastic about the revenue potential related to advancements in 3-nanometer technology, expecting significant annual revenue growth.

Addressing the competitive landscape, especially considering strategic moves by Nvidia and Arm, Alchip’s general manager, Shen Xianglin, expressed confidence in maintaining a competitive edge in the AI and ASIC markets. He emphasized the strategic necessity for cloud service providers (CSPs) to diversify their chip sources to reduce dependency risks and ensure supply chain autonomy, positioning Shixin advantageously as CSPs navigate the next evolution phase of the semiconductor sector.

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