The Fab Production Capacity Remains High, And The New And Old Products In The Second Half Of The Taiwan Plant Are Coming Together Or Bringing Strong Growth.

In the second half of 2018, the utilization rate of the wafer plant capacity is still high-end, coupled with the client still concerned about delivery and capacity, and did not deliberately lower prices, with many new products in the second half of the year will start to import into mass production, Taiwanese IC design companies are optimistic that the third quarter gross margin continues to strengthen, leading to profit growth in 2018.

Taiwanese IC designers have announced their second-quarter earnings, with gross margins generally rising, suggesting that terminal chip quotations are not willing to slash prices at downstream customers because of tight upstream wafer OEM capacity utilization, allowing the average unit price of chips to maintain a high-end level, without having to follow the quarterly discount inertia of 3-5%, coupled with a small internal chip factory. Shrink, reduce costs and so on, so that the second quarter gross margin rebounded.

Cai Lixing, the chief executive of the division, previously said that revenue growth in the third quarter was feared to be less than 11% because of the high base period for the second quarter. However, the gross margin forecast is in the range of 36.7-39.7%, and the high level is close to 40%. This shows that the division is optimistic that the upstream wafer OEM capacity will continue to tighten, which will help to improve profitability.

MediaTek has a significant market share in global chips such as TV, smartphones, tablets, etc. It does not need to lower its own chip quotes to increase market share, coupled with internal actions to reduce chip costs, chip quotes will continue to be stable in the third quarter, with gross margin expected to be close to 40% in the second half of 2018.

As for the third quarter gross margin performance, Lianyong and Ruiyu of Taiwanese IC design factories are also optimistic. Due to the high gross margin during the traditional peak season, new products with high gross margin and mature product lines with reduced cost structure, shipments have further climbed, while chip quotations can be maintained, and the one-quarter gross margin is expected to rise to a higher level in the third quarter. The key factor of profit growth.

However, looking forward to 8 inch wafer capacity all the way to 2019, upstream wafer substitutes will consider raising quotations, will be the future chip factory gross margin can maintain high-end variables. Historically, as long as upstream wafer capacity is tight, the average gross margin of the chip industry still has room for further improvement.

The tight wafer OEM capacity can indeed reduce the vicious competitive action in the chip market. When the second and third-tier competitors and small IC design companies are unable to obtain sufficient capacity, chip quotations are not likely to fluctuate dramatically. Customers are worried about the adequacy of chip capacity. They generally require the stable supply of Taiwan IC design companies first, but no longer have any intention of doing so. Cut the chip price down to reduce the cost.

With the introduction of more advanced manufacturing technology and cost-effective chip area minimization schemes, shipments began in the second half of 2018, Taiwanese IC design companies are optimistic about the third quarter gross margin performance.