Taiwan-based set-top box (STB) chip vendors Rafael Micro and Ali are seeing clearer order visibility for 2019 than 2018, likely to score record-high profits for the year thanks to the growing TV replacement demand prior to the Tokyo 2020 Summer Olympics, according to industry sources.
The two makers, affected by shortages of many components and weak TV replacement demand following the FIFA World Cup last June, saw their shipments of STB chip solutions shrink sharply in the second half of 2018, when US-China trade tensions were escalating.
But their shipments are expected to pick up quarter by quarter in 2019, as demand from procurement markets in emerging countries are rebounding and STB upgrades to support 8K resolution applications are also gaining momentum, the sources said.
Rafael Micro, partly bolstered by shipments of its new broadband STB ICs paired with chip solutions by leading US chipmakers, posted much better first-quarter 2019 profit performance than a year earlier.
Since its shipment ratio for new chipsets involving higher gross margins will continue to expand steadily, Rafael Micro has a chance of winning a double-digit revenue growth in 2019, with stronger growth momentum expected for profits than revenues.
For Ali, still under pressure from years of operating losses, its deployments in the Pay TV markets worldwide have progressed well, having built mid- and long-term partnerships with clients in Southeast Asia, India, Russia, East Europe, Africa and Latin America, the sources said.
This, coupled with Ali's new offerings in three major product lines - STB chips for retail, pay TV and digital audio applications - will help the company easily swing to profitability in 2019 now that a new wave of TV replacement demand will emerge with the approaching of the 2020 Olympics Games, the sources added.
Article translated by Willis Ke
