Faraday Reports Third Quarter 2019 Financial Results

Hsinchu, Taiwan – October, 29 2019 -- Faraday Technology Corporation (“Faraday” or the “Company”) (TWSE: 3035), a leading fabless ASIC service and silicon IP provider, today announced its consolidated financial results for the third quarter of 2019. Third quarter consolidated revenues were NT$1,592 million, up 31.0% quarter-over-quarter and 13.2% year-over-year, with gross margin at 50.4%. Net income attributed to stockholders of the parent was NT$146 million, with a basic earnings per share of NT$0.59.

Looking back to the third quarter, Faraday delivered outstanding business performance thanks to its new high sales of both mass production and NRE. Overall revenues grew over 30% quarter-over-quarter to NT$1,592 million, reaching a 13-quarter high. As to NRE, the Company has continued to expand in high design value projects in recent years which resulted in the historical high NRE sales at NT$414M in the third quarter. Profit of NRE also achieved new height on the contributions from numerous high design value ASIC wins and 14nm FinFET project. As to mass production, besides the continuous shipment momentum of smartmeter, sales of communication and niche applications also performed well. 5G ASIC has been successfully shipped out in the second half this year. The niche applications with less seasonality also delivered stable shipment volumes. Those applications featured by wide variety and customization are the areas which Faraday has been acknowledged for expertise and many are its long-cultivated superior applications. Although gross margin in the third quarter was lower than that in the prior quarter, operating margin increased eight percentage points to 12.6%. Net income attributed to stockholders of the parent increased significantly by 159% quarter-over-quarter to NT$146 million, the best since the second quarter of 2017.

The market of ASIC is booming. The rising AIoT applications, opportunities from US-China trade war and significant technology progresses, along with the limited IC design service players due to high entry barrier, resulting in numerous business opportunities to the ASIC vendors. Faraday’s operation model has its uniqueness, the IP-platform driven vertical integration model, which helps the Company obtain considerable synergy and investment return by leveraging its R&D resources management and effectively supports the long-term growth of the Company. Looking into the fourth quarter, revenues are expected to continue a year-over-year growth while NRE likely set a new record. Faraday holds optimistic outlook for 2019 and expects both IP and ASIC to continue on the growth trajectory.

Summary of Operating Results

(Amount: NT$ million)	3Q19	2Q19	QoQ% change
Net sales	1,592	1,215	31.0
Gross profit	802	664	20.8
Operation expenses	(602)	(609)	(1.1)
Operating income	200	55	261.3
Non-operating income and expense	(22)	14	(256.4)
Net income attributed to stockholders of the parent	146	56	159.0
Earnings per share (NTD)	0.59	0.22