WIN Semiconductors reported financial results for the second quarter, with revenue growing 16 percent above Q1 to NT$3,820 million (approximately $126.4 million), which was 7 percent above the year-ago quarter and a record for the company.

WIN Semi revenue trends.
WIN Semi revenue trends.

In a release, WIN attributed the revenue growth to inventory builds to support the smartphone market. Between 35 and 40 percent of the quarter’s revenue was attributed to cellular, with a similar amount to Wi-Fi — most likely targeted for handsets. Infrastructure accounted for between 20 and 25 percent and other applications just 3 percent. A year ago, cellular accounted for between 50 and 55 percent, Wi-Fi was 35 to 40 percent and 15 to 20 percent came from infrastructure.

The revenue growth improved gross margin 3.5 points sequentially to 37.2 percent, and operating margin increased 3.8 percentage points to 26.1 percent.

The company’s press release stated “This gross margin improvement shows that, quarter-by-quarter, the short-term negative impact on gross margin from our active capacity expansion last year has been mitigated following the increase in utilization rate. It also validates our decision to invest in building a new factory over the past two years.”

In May 2017, WIN announced completion of the second phase of its Fab C expansion, which is located in Guishan, Toayuan City, Taiwan. The 706,000 square foot facility will more than double WIN’s capacity when it is fully built out and equipped.

Providing guidance for Q3, WIN expects strong smartphone demand will continue into the third quarter, with additional revenue from optical devices. The combination will yield sequential revenue growth in the “low teens” and further improvement in gross margin.