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WPG expects revenue, profit drops in 2Q22

Julian Ho, Taipei; Eifeh Strom, DIGITIMES Asia 0

Credit: DIGITIMES

IC distributor WPG Holdings expects to post sequential revenue and profit drops in the second quarter of 2022, due to the impact of COVID-induced lockdowns in China on both its supply chain and end-market consumer electronics demand.

WPG posted record highs for both revenue and profit in the first quarter, attributed to the strong shipments of downstream customers, including notebooks, PC, base stations, network communication peripheral equipment, server, and cloud, which drove strong demand for semiconductors and related electronics components.

The second quarter witnessed inventory adjustments for notebooks and PCs, the ongoing uneven supply of components, and a significant downward revision for Chromebooks, according to WPG. However, enterprise and gaming products remain relatively stable, and overall demand from the notebook and PC sector in 2022 should be comparable to 2021.

In terms of mobile phone chips, since fourth-quarter 2021, major chip makers have made significant adjustments to their product portfolios, according to distributors. The industry expects mobile-phone-related demand in 2022 to slightly drop, due to the uncertainty in the overall mobile phone market coupled with global inflation. While orders and seasonality for iOS products are relatively clear, it is less clear for Android phones, particularly Chinese brands.

Demand for chips such as for automotive electronics, memory, and servers remains strong. The supply of automotive chips continues to be short. For electric vehicles (EV), the greatest demand has been coming from major vendors in the US and China, and growth for EV-related chips is likely in 2022. Memory IC supply has been reduced due to the materials contamination problem that occurred earlier at a major Japan-based manufacturer, but recent demand has been strong. In the server segment, slight growth is expected where demand for power management ICs (PMIC) remains stable.

WPG expects revenue to reach NT$190-$200 billion (US$6.55-$6.89 billion) in second-quarter 2022, at an exchange rate of NT$29:US$1. The company expects gross margin to be around 3.7-3.9%, operating margin to be between 1.7-1.9%, and net profit to reach NT$2.3-$2.72 billion.

WPG said while it continues to work toward increasing its profits and market share, it is also actively investing in environmental, social, and governance (ESG) and sustainable operations. WPG said its MSCI ESG rating was recently raised to BBB, the highest of any semiconductor component distributor globally.