Faraday Reports Gross Margin 54.6% for 4Q2017, Reaches 10-Year High 2017 EPS of NT$3.40 on Revenues of 5.34bn

Hsinchu, Taiwan -- Feb. 08, 2018 -- Faraday Technology Corporation (“Faraday” or the “company”) (TWSE: 3035), a leading fabless ASIC service and silicon IP provider, today announced its consolidated operating results for the fourth quarter of 2017. Fourth quarter consolidated revenues were NT$1,131 million, down 10.9% quarter-over-quarter while gross margin increased 2.1 percentage points sequentially to 54.6%. Net income attributable to parent was NT$41 million, with a basic earnings per share of NT$0.17.

In the fourth quarter, the revenues of IP and NRE, the high margin segments, continued to rise. NRE revenues were up 6% quarter-over-quarter to 160 million driven by the strong design wins in the fourth quarter. The major wins for new applications included AI, blockchain, HPC and IoT such as 3D sensing and cryptocurrency. Overall, the niche products remained the focus and accounted for 46% of revenues which was 10 points higher than the same period last year. With the incremental sales from high margin segments IP and NRE, gross margin in the fourth quarter reached 54.6%, setting a ten-year high.

In 2017, through strategic transformation, the influence of commodity to company’s operation gradually diminished and was superseded by the niche products with high entry barrier and long life cycle. Despite shrunk revenues from commodity, the overall revenues still grew slightly to 5.34bn from 2016 with an EPS of NT$3.40. Faraday’s strategic transformation was in place in 2017. As a result, the number of new NRE project increased significantly. With a focus on high value products, Faraday also successfully enhanced revenue quality and product mix while moving itself out of the commodity segment.

Looking forward to 2018, ASIC market is expected to grow with the booming trends such as AI and HPC. Faraday’s comprehensive solutions will actively expand the growing applications, aiming to move toward the niche market and establish long-term competitiveness.

Summary of Operating Results

(Amount: NT$ million)	4Q17	3Q17	QoQ% change
Revenue	1,131	1,269	(10.9)
Gross Margin	618	666	(7.3)
Operation Expenses	(577)	(556)	3.8
Operating Income	41	110	(63.0)
Non-operating Income and Expense	4	43	(90.9)
Net Income (Attributable to Parent)	41	124	(66.7)
EPS (NT$ per share)	0.17	0.50

Financial Tables

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