Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q2 revenue increased by approximately 16% YoY, indicating strong annual growth.
- Operating profit in Q2 rose by 15% QoQ and 2% YoY, showing improved profitability.
- Component division saw a 13% QoQ and 15% YoY revenue increase, driven by higher sales in IT, industrial, and automotive sectors.
- Package Solution division experienced a 17% QoQ and 14% YoY revenue growth, fueled by demand for high-end substrates.
- MLCC demand increased across all applications, including IT, industrial, and automotive, with expectations for continued growth in Q3.
Negative Points
- Overall Q2 revenue decreased by 2% QoQ, indicating a short-term decline.
- Optics & Communication Solution division's Q2 revenue dropped by 22% QoQ due to negative seasonality and weak EV demand.
- Debt to equity ratio increased slightly QoQ, reflecting a rise in financial leverage.
- Automotive camera module sales decreased in Q2 due to stagnant global EV growth.
- Flip chip BGA market faces continuing oversupply, posing challenges for the package substrate business.
Q & A Highlights
Q: Can you share with us the MLCC shipment inventory level and ASP, second quarter actual and the third quarter guidance? Also, how do you plan to increase revenue in AI-related applications?
A: In Q2, MLCC shipments increased across all applications, with double-digit growth in industrial and automotive MLCCs. Inventory days slightly decreased, and blended ASP improved due to product mix improvements. For Q3, we expect MLCC revenue to increase due to seasonal demand growth and new product launches. In AI PCs and servers, higher performance chipsets and increased power consumption drive the need for more MLCCs. We will focus on strengthening our promotion to PC server OEMs and processor customers to increase AI-related revenue.
Q: What is the outlook for the flip chip BGA business in the second half, given the continuing oversupply of substrates?
A: Despite the oversupply, demand for high multilayer large-sized package substrates for server and AI applications remains strong due to high technology entry barriers. We continue to expand supply to global customers and prepare for mass production of substrates targeting AI accelerators. We will align with growing customer demand to expand our high-end package substrate supply.
Q: What is the outlook for the mobile camera module business in the second half?
A: We focus on the flagship camera module segment and expect continued demand for specialized solutions like high pixel folded zoom cameras and slim cameras for foldable models. We will develop differentiating camera modules leveraging our internalized lens and actuator technology to enhance product competitiveness.
Q: Can you elaborate on your future MLCC utilization plan and capacity expansion?
A: Our MLCC utilization has been increasing since Q4 last year, and we expect this trend to continue in Q3 due to seasonal demand growth and solid industrial and automotive market demand. We plan to continuously expand capacity in line with demand growth.
Q: What is the progress of the Vietnam flip chip BGA plant, and how do you assess the cost structure?
A: The Vietnam plant started contributing to revenue in Q2, with more products passing customer qualifications. Despite increased depreciation, the focus on higher-margin, high-end products will mitigate the impact on the bottom line. We aim to ramp up mass production smoothly and positively contribute to the flip chip BGA business performance in the second half.
Q: Can we expect the growth of the automotive MLCC business to continue in the second half despite the slowdown in EV growth?
A: Yes, the automotive MLCC market is expected to continue growing due to improved market inventory and double-digit growth rates in the EV market. We will focus on increasing revenue by diversifying our customer base and expanding our high temperature, high voltage lineup.
Q: What is the current update and second half outlook for the automotive camera module business?
A: In Q2, automotive camera module revenue slightly decreased due to the slowdown in EV demand but maintained a Y-o-Y growth trend. We aim for double-digit growth on a full-year basis by breaking into new auto OEM accounts and mass-producing high-reliability camera modules. We will expand our business by strengthening our solution lineup and diversifying our customer base.
Q: What is the overall business outlook for the third quarter?
A: In Q3, we expect demand recovery in key applications like smartphones, PCs, and servers, driven by AI growth. We will focus on increasing the lineup of high-end products, including MLCCs for AI servers and automotive applications, and large area, high multilayer package substrates. We will also monitor external business environments and implement appropriate response plans to minimize volatility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
