Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q3 revenue increased by approximately 2% QoQ and 11% YoY, indicating strong financial performance.
- Operating profit rose by 6% QoQ and 20% YoY, showcasing improved profitability.
- The component division saw a 3% QoQ and 9% YoY revenue increase, driven by demand in AI, server, network, and automotive sectors.
- The package solution division experienced a 12% QoQ and 27% YoY revenue growth, with increased supply of high-end products.
- Automotive camera module revenue increased due to improved sales volume and demand from global EV customers.
Negative Points
- Optics and communication solution division revenue decreased by 6% QoQ, despite a 5% YoY increase, due to reduced supply to overseas IT customers.
- MLCC market demand is expected to slow down in Q4 due to year-end inventory adjustments.
- Q4 is anticipated to be weaker than Q3 due to continued soft IT set demand and usual year-end component inventory adjustments.
- The optics and communication solution division faced challenges with IT camera modules, impacting QoQ revenue.
- Seasonal weakness in smartphone and PC demand is expected to affect the package substrate market in Q4.
Q & A Highlights
Q: Can you share your MLCC shipment inventory level and ASP results for Q3, and your outlook for Q4? Also, what is the outlook for next year's MLCC utilization and applications?
A: In Q3, MLCC shipments increased slightly due to new product launches and solid demand in industrial and automotive sectors. Inventory days remained similar to Q2, and ASP increased due to a higher share of industrial and automotive MLCC. For Q4, high-end demand is expected to remain solid, but overall shipments may decrease slightly due to seasonality. Looking to 2025, MLCC utilization is expected to improve with growth in IT, industrial, and automotive sectors, driven by higher performance requirements and increased electronic content in vehicles.
Q: What is the current revenue level from AI servers for your MLCC and flip chip BGA businesses, and how do you expect it to grow next year?
A: This year, MLCC revenue for servers is expected to more than double, primarily driven by AI server demand. We anticipate similar growth next year by leveraging high-end MLCC products. For flip chip BGA, revenue is also expected to double, with plans to start mass production for AI accelerators. We foresee significant year-on-year growth in 2025, focusing on stable supply and next-generation technology adoption.
Q: Has the rapid growth in AI servers affected your MLCC strategy, especially with the leveling off of EV market growth? Also, what is the current MLCC channel inventory situation?
A: Despite a slowdown in EV growth, the automotive MLCC market is expected to grow mid-single digits. We will continue to focus on revenue growth by adding new accounts and winning design-ins. AI servers require more MLCCs, and we are leveraging our technology to capture this market. Current MLCC inventory levels are stable, with solid demand for AI server and automotive MLCCs. We expect stable inventory levels next year, driven by AI and automotive demand.
Q: Can you provide an update and outlook on your automotive camera module business, and any new business developments?
A: In Q3, automotive camera module revenue increased due to strong demand from global EV customers. We are enhancing our camera solutions to meet the growing need for high-specification modules. For new business developments, we are progressing with silicon capacitors, hybrid lenses, and all-solid-state batteries. Mass production of silicon capacitors has begun, and we plan to expand supply in 2025. Hybrid lenses are set for mass production next year, and all-solid-state batteries are in customer testing, targeting mass production in 2026.
Q: What is your outlook for Q4 and 2025, considering the current uncertainties and seasonality?
A: Q3 results improved due to strong sales in AI server and automotive sectors. Q4 may be weaker due to soft IT demand and inventory adjustments, but high-end product growth is expected to continue. For 2025, despite external uncertainties, we anticipate growth in AI-related products and automotive sectors. We will focus on securing core technologies, expanding supply capacity, and improving internal efficiency to support growth and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
