Gigabyte Technology Co Ltd (技嘉), a leading supplier of motherboards and graphics cards, is forecast to see lower profitability in the second quarter, due to a decline in shipments and graphics cards prices as the cryptocurrency mining frenzy gradually abates, Capital Investment Management Corp (群益投顧) said last week.
Cryptocurrency mining continues to suffer from tighter security and regulatory measures around the world, with bitcoin’s price having dropped about 55 percent this year, Bloomberg News said, citing the Luxembourg-based Bitstamp exchange.
“The prices of major cryptocurrencies have plunged after peaking in early 2018 ... leading to persistently lower demand for cryptocurrency mining and for Gigabyte graphics card shipments, which decreased somewhat since the beginning of the second quarter,” Capital Investment said in a note on Thursday last week.
Gigabyte’s revenues reached about NT$5 billion (US$163.9 million) in April and again in May, notably lower than March’s NT$8.5 billion, and its second-quarter revenues could be less than in the first quarter, Capital Investment said.
“In our opinion, as the average selling price of graphics cards is expected to edge down, the second-quarter gross margin could underperform quarter-on-quarter,” the investment advisory firm said.
Gigabyte shipped 1.2 million graphics cards in the first quarter and the company said that shipments could see a quarterly decline of 20 percent in the second quarter, the Chinese-language Economic Daily News reported on Wednesday.
The company shipped between 300,000 and 350,000 graphics card units in April and again in May, compared with 450,000 in March, the report said.
Sales from motherboards accounted for 49 percent of Gigabyte’s total sales in the first quarter, followed by graphics cards at 36 percent and servers at 15 percent, the newspaper quoted company spokesman K.J. Sun (孫國仁) as saying at an investors’ conference.
The proportion of sales from graphics cards would drop quarterly in the second quarter, while sales from motherboards and servers would increase, Sun said, without elaborating.
In the second half this year, the company is expecting Nvidia Corp’s planned launch of its new family of Volta graphics processing units (GPUs) to bolster graphics card sales, he said.
However, demand for graphics cards in the next few quarters might not be as robust as the company expects, despite the rapid development of the e-sports industry, Capital Investment said.
It is rumored that Nvidia’s inventory of old GPUs remains high and the launch of the new GPU model might be postponed until September or even the fourth quarter, while Intel Corp might also delay the launch of its new Cannon Lake chip, Capital Investment said.
“Gigabyte’s revenue and earnings in the second half this year could be negatively affected,” it said.
Gigabyte shares on Friday rose 3.22 percent to NT$67.4 in Taipei trading. It reported that its sales for the first five months of the year rose 40.34 percent year-on-year to NT$30.53 billion.
The company saw its shares fall 14.25 percent last month, mirroring broad-based declines among local motherboard and graphics card makers in light of the weaker demand for products used in cryptocurrency mining and the delayed launch of Nvidia’s Volta GPU.
VALUABLE STOCK: The company closed at NT$1,005 a share, on demand for AI and HPC chips, and is expected to issue a positive report during its earnings conference Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares rose 2.66 percent to close at a record high of NT$1,005 yesterday. as investors expect the company to continue benefiting from strong demand for artificial intelligence (AI) and high-performance computing (HPC) chips. TSMC is the 19th member of the local bourse’s NT$1,000 stock club, which includes smartphone chip designer MediaTek Inc (聯發科) and electric transformer manufacturer Fortune Electric Co (華城電機). Yesterday’s rally swelled TSMC’s market capitalization to NT$26.06 trillion (US$802.3 billion) and contributed about 211 points to the TAIEX, which closed up 350.1 points, or 1.51 percent, to 23,522.53, another record high, Taiwan Stock
Luxgen Motor Co (納智捷汽車), a subsidiary of Yulon Motor Co (裕隆汽車), yesterday said it is again offering a NT$100,000 discount for its entry-level n7 electric vehicle models. The n7’s price has gone down from NT$1.099 million to NT$999,000, Luxgen said, adding that there are 25,000 preorders for the model. MG Motor’s electric hatchback, the MG4, entered the market in the middle of last month, with a starting price of NT$990,000. China Motor Corp (中華汽車), which distributes MG vehicles in Taiwan, said it aims to sell 1,600 MG4s this year. MG, originally a British brand, was acquired by China’s SAIC Motor
Google on Monday said it is planning to invest in New Green Power Co (NGP, 永鑫能源), a solar energy developer owned by BlackRock Inc, to build 1 gigawatt of solar capacity in Taiwan to supply clean energy for its local data center and offices. “Our investment in NGP, subject to regulatory approval, will serve as development capital toward its 1 GW pipeline of new solar projects, catalyzing critical equity and debt financing for those projects,” Google’s Data Center Energy global head Amanda Peterson Corio wrote on a company blog. It did not disclose financial details. “We expect to procure up to 300 megawatts
‘MORE PRACTICAL’: If the cap were lowered, it would spark an influx of funds that would be difficult to track as insurance firms adjust to the new rules, an official said Overseas investment would remain capped at 45 percent of local insurers’ total assets, as there are scant investment tools at home and potentially significant losses from sudden divestments, the Financial Supervisory Commission (FSC) said yesterday. The commission’s comments came in response to a legislator’s concern over the effect of a proposed revision to the Insurance Act (保險法) to lower the upper limit to 25 percent. The revision was proposed by Chinese Nationalist Party (KMT) Legislator Lo Ming-tsai (羅明才). The proposed 25 percent cap is even lower than the 35 percent implemented before 2007. About 17 years ago, the legislature raised the upper limit