WIN Semiconductors reported a soft December quarter, reflecting the seasonality of the mobile phone market — recall that WIN’s shipments preceed phone shipments by one to two quarters. However, revenue for the full year grew 13 percent.
Q4 revenue was NT$3,206 million (approximately $103 million), down 10 percent from Q3 and essentially flat with Q4 of 2015 (0.3 percent growth). Gross margin was 30 percent, compared to 35 percent in Q3 and 41 percent in Q4 of 2015. Operating margin was 18 percent, compared to 24 percent in Q3 and 31 percent in Q4 of 2015. The margin decline was attributed to a decline in capacity utilization; a drop in the value of gold inventory, reflecting the decline in gold prices; and new items consolidated into the income statement, per the International Financial Reporting Standards (IFRS). Fab utilization in Q4 was approximately 80 percent, compared to 90 percent in Q3.
In Q4, WIN estimated that 45 to 50 percent of revenue came from the cellular market, 35 to 40 percent from Wi-Fi and 15 to 20 percent from wireless infrastructure, the same proportion as in Q3.
For the full year, WIN revenue was NT$13,623 million (approximately $439 million), up 13 percent from 2015. Gross profit increased 5 percent year-over-year to NT$4,989 million; however, gross margin declined from 40 percent to 37 percent. Operating income for the year was NT$3,495 million, down 0.4 percent from 2015, and operating margin declined year-over-year from 29 percent to 26 percent. Net income increased 16 percent to NT$3,096 million, and earnings per share (EPS), based on the full year weighted-average outstanding shares, was NT$6.04, 52 percent above the NT$3.97 in 2015.
Discussing market trends, the company stated: "Although the growth for global smartphones is limited, WIN Semi continues to benefit from smartphone spec upgrades. For both cellular and Wi-Fi, the demand for GaAs components is increasing. For infrastructure / non-handset, as it requires WIN Semi's unique high frequency, high power component technology, we delivered good financial performance for the past few years, and are very confident toward the growth for this year. Lastly, we expect the optical device technology announced last year to offer solid revenue contribution this year."
In addition to WIN’s core applications, the company is pursuing “mid term” growth opportunities in optical devices and automotive connectivity. Long term, the company sees 5G, including “massive IoT deployment” as supporting continued success.
Q4 2016 Investor Presentation
WIN provided the following presentation to discuss their Q4 earnings release.