Taiwan-based AP Memory Technology, a Powerchip Technology subsidiary specializing in customized DRAM memory designs and IPs, expects its gross margin to pick up in the third and fourth quarters thanks to improvement in its IoT product mix.
The company's second-quarter 2022 revenues reached NT$1.539 billion, a flat performance as compared to the first quarter, but its gross margin for the period slipped 6pp to 40.96%. Its January-June revenues grew 7.76% on year to NT$3.083 billion.
At a recent earnings call conference, AP Memory president CH Hung said the profit margin decline mainly resulted from a higher shipment ratio for IoT RAM chips with low gross margin. He said the company will move to boost shipments of higher-profit IoT RAM products in the second half of the year, looking to return its gross margin to regular levels of over 46%.
Hung said IoT-related businesses contribute 80% of revenues, focusing on customized design and sales of IoT RAM chip solutions and IPD (integrated passive devices) products. Its IPD shipments are expected to ramp up starting late 2022 and contribute more revenues in 2023, he added.
AP Memory now has an inventory level of seven months for customized IoT RAM products, slightly higher than a regular level of six months, but the inventory is expected to return to normal in the fourth quarter, as clients may move to take more shipments after inventory adjustments, according to Hung.
As to its AI business line, Hung noted, the company offers the world's first 3D VHM (very high-bandwidth memory) solutions boasting heterogeneous integration of DRAM and logic chips, with clients mainly engaged in cryptomining and blockchain applications.
Hung also disclosed the company has joined forces with clients dedicated to non-mining HPC applications to develop customized VHM solutions, and has also landed new NRE (non-recurring engineering) projects that are expected to start revenue contributions in 1-2 years. He stressed that AP Memory will actively develop new markets and build complete ecosystem for VHM solutions for mainstream AI and HPC applications.
Its chairman WL Chen said the company is confident about the future prospects for its AI business line, and disclosed new tape-outs for IoT clients have rebounded to normal levels along with the improvement of component shortages, becoming an important growth driver in 2023.
Article translated by Willis Ke
