World Advanced Q3 earned 0.91 yuan per share! Chairman’s strategy: Q4 inventory correction has bottomed out ahead of schedule

World Advanced announced its third-quarter financial report today (4th). Revenue was approximately NT$12.349 billion (the same below), a quarterly increase of 5.6%. The main reason was that wafer shipments increased by approximately 7% from the previous quarter, and product average sales unit prices increased by approximately 2% quarterly. Net profit attributable to owners of the parent company was approximately NT$1.703 billion; after-tax earnings per share were approximately NT$0.91, a quarterly decrease of 17.3% and an annual decrease respectively. 29.5%; gross profit margin fell by 1.2 percentage points to 26.8%.

World Advanced General Manager Wei Jishi pointed out that as customer demand for power management products continues to rise, wafer shipments in the third quarter increased by approximately 7% from the previous quarter, the average product sales unit price increased by approximately 2% quarter-on-quarter, and gross profit margin dropped to 26.8% due to the impact of exchange rates, all in line with the company's third-quarter outlook.

Looking forward to the fourth quarter, Wei Jishi said that due to the slowdown in seasonal demand and inventory adjustments in the supply chain at the end of the year, under the assumption of an average exchange rate of NT$30.2 to 1 US dollar, wafer shipments in the fourth quarter are expected to decrease by approximately 6% to 8% quarter-to-quarter; the average unit sales price of products will increase by approximately 4% to 6% quarter-to-quarter; and the gross profit margin will be approximately between 26.5% and 28.5%. In addition, after negotiating with customers, the company expects to recognize additional long-term contract revenue accounting for approximately 1% of operating revenue in addition to wafer revenue.

Wei Jishi pointed out that although the global market is facing multiple challenges, customer wafer demand continues to grow in the long term, and World Advanced will build and expand production capacity according to the established plan; in terms of capital expenditures, Singapore's 12-inch wafer fab VSMC has moved in machinery and equipment, and is expected to start trial production at the end of 2026 and mass production in 2027; the outlook for capital expenditures in 2025 remains unchanged at about 65-70 billion yuan, of which 90% is used for VSMC. Expenditures for factory construction and equipment purchase are used, and the rest is used for routine maintenance of equipment and optimization of other factories.

In terms of order visibility, thanks to the wafer demand for power management products in the automotive, industrial control, and server fields, the overall order visibility has remained at three months, with the capacity utilization rate in the third quarter at 77%. In the fourth quarter, it will decrease by low single-digit percentage points to about 74-75%. In addition, panel driver IC wafer demand will slow down.

Looking forward to 2026, World Advanced Chairman and Strategy Chief Strategy said that global GDP is expected to grow by about 3.1%, and the semiconductor industry is also expected to usher in annual expansion. The company has observed that most customers have actively controlled inventory since this year, and it is expected that the inventory correction will bottom out in the fourth quarter, and may even bottom out early. As the global AI investment boom continues to expand, hardware construction will become a key driving force. World Advanced has been deeply involved in the field of power management for a long time, and has a solid technical foundation and accurate market forecasting capabilities in AI server and data center applications. The company expects that as AI drives a new wave of hardware demand growth, 2026 will usher in a healthy growth stage driven by AI applications.

Talking about the compound semiconductor strategy, Wei Jishi said that the SiC part has cooperated with Hanlei and has become a shareholder. The two parties have jointly developed the process. The trial production line is currently "on track" and is expected to be completed in the first quarter of next year in the world's most advanced 8-inch factory and trial production will begin in the second half of the year. GaN products are an important investment for the company and have now entered the mass production stage and are operating smoothly. They are optimistic that they will bring profits in the future and become a new driving force to support operations.

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