South Korean fabless companies have performed strongly in the first quarter, backed by large volumes of order from Chinese clients, their filings to the local finance watchdog showed Friday.
However, uncertainty remains high for the second quarter from the US-China trade war and lackluster performances from their customers due to the COVID-19 pandemic, the companies warned.
Silicon Works, an affiliate of LG Group, saw operating profits of 11.7 billion won from revenues of 212.6 billion won in the first quarter, a rise of 562.9% and 19.8%, respectively, from a year ago, it said in its filing to the Financial Supervisory Service.
The company benefited from digital integrated-circuit (IC) sold to Chinese LCD TV vendors. The business saw sales jump 18.1% from a year ago, according to So Hyun-chul at Shinhan Investment. Silicon Work’s diversified client portfolio in China also contributed to the high earnings, So said.
Silicon Works supply its goods to Chinese display giants BOE and CSOT.
iA Inc also benefited from China, posting operating profits of 2.2 billion won and sales of 14.6 billion won in the first quarter. Operating profit rose 334.1% from a year ago. Order from IA China, a joint venture with the city of Yancheng, contributed to the growth, it said.
Dongwoon Anatech also saw earnings rise from China. The company is supplying driver IC for Huawei’s OIS technology used in smartphones.
Some fabless companies posted lackluster results, however.
Telechips, which specializes semiconductors for automobiles, saw operating loss of 2.8 billion won, a drop of 326.5% from a year ago. Eugene Investment analysts Park Jong-sun said the company saw sales from automobiles drop 19.9% due to factory shutdowns in China due to the COVID-19 outbreak.
Fidelix and Tli Inc also posted lower-than-expected earnings.
COVID-19 will continue to loom over these companies in the second quarter due to delay in normalization of the global supply and distribution chains, company representatives told TheElec.
A Telechips spokesperson said the company expected the second half just as difficult due to the lingering uncertainty caused by the virus outbreak, citing how it was directly affected by shutdowns of factories run by Hyundai Motor and Kia Motors in China.
A Fidelix spokesperson also voiced concerns over future performances due to the uncertainty.