Unlocking the Future: Faraday’s 2024Q3 Religion Conference Recap and Exclusive Insights from Zhiyuanfa on Memo – A StockFeel Exclusive

Faraday Technology (3035) was founded in 1993 in Hsinchu Science Park, Taiwan. It is an IC design services firm invested by United Microelectronics (UMC) and Asia’s first manufacturer offering ASIC services.

Zhiyuan Dharma Lecture Conference: Summary of Key Points

1. 2024Q3 revenue, QoQ +29.4%, YoY +35.3%, all three major products rose from the previous quarter, and both IP (Silicon Intellectual Property) and NRE (Entrusted Design Services) revenues reached one-quarter highs, MP (Mass Production) revenues were up is back on track.
2. The financial outlook for 2024Q4 projects IP (Silicon Intellectual Property) and NRE (Design Services Assigned) to decline quarterly, while MP (Mass Production) will grow by around 10% quarter-on-quarter, similar to 2024Q3 revenue. The overall gross profit margin will be slightly reduced.
3. It is expected that in 2024, IP (Silicon Intellectual Property) and NRE (Entrusted Design Services) will reach new highs for four consecutive years, but MP (Mass Production) is still undergoing inventory adjustment, and the recovery speed is very slow.
4. Optimistic about acceleration in expected revenue growth in 2025 Revenues hit record highs and are expected to grow 40% YoY.
5. In 2025, the growth rate of three major products is expected to come from improved packaging, which has increased several times compared to this year.

Zion Fa Lecture: Company Operation Status

1. 2024Q3 revenue was 2.884 billion, QoQ +8.9%, YoY -2.6%, gross profit margin 46.4%, operating profit margin 10.7%, net profit margin 9.6%, EPS 1.01 yuan.
2. IP (Silicon Intellectual Property) revenue was 446 million, QoQ+ 35.3%, NRE (Entrusted Design Services) was 649 million, QoQ+ 0.6%, YoY+ 102.1% MP (Mass Production) revenue was 1.789 billion yuan; QoQ+7.8%, YoY-22.6%.
3. All three major products were up from the previous quarter, and both IP (Silicon Intellectual Property) and NRE (Design Services Assigned) reached single-quarter highs. MP (mass production) revenue returned to upward momentum, IC mass production slowly recovered, and MCU demand remained high, leading to higher mass production revenue in the third quarter than the previous quarter, and future advanced packaging projects started for mass production, MP (mass production) is expected to grow 10% QoQ in the fourth quarter.
4. 2024Q3 revenue ratio, IP 15% (last quarter 13%), NRE 23% (last quarter 24%), MP 62% (last quarter 63%).
5. The 2024Q3 NRE (design services assigned) revenue ratio by individual industry is Industrial 63%, Communications 22%, AIoT 11%, and MM/Con/PC 4%.
6. In 2024Q3 MP (Mass Manufacturing) individual industry revenue ratios are Industrial 28%, Communications 10%, AIoT 55%, and MM/Con/PC 7%.
7. As for advanced packaging projects, two projects have been signed so far, and there is a high probability that another one will be signed in the next two months.
8. It is expected that adults will be signed for the project with the production process, but three have been canceled, the current source at hand is very rich, and the focus is how Faraday will win this case in the future.
9. The financial outlook for 2024Q4 projects IP (Silicon Intellectual Property) and NRE (Design Services Assigned) to decline quarterly, while MP (Mass Production) will grow by around 10% quarter-on-quarter, similar to 2024Q3 revenue. The overall gross profit margin will be slightly reduced.
10. It is expected that throughout 2024, IP (Silicon Intellectual Property) and NRE (Entrusted Design Services) will reach new highs for four consecutive years, but MP (Mass Production) is still undergoing inventory adjustment, and the recovery speed is very slow. Additionally, MCU’s growth rate exceeded expectations, with an annual growth rate of more than 2%.
11. Optimistic about acceleration in expected revenue growth in 2025 Revenues hit record highs and are expected to grow 40% YoY. And the three main products will show growth, and the growth speed in order is 1. MP (mass production) 2. NRE (dedicated design services) 3. IP (silicon intellectual property). MP’s growth spurt comes from improved packaging, which has increased several times this year.

Source: Ji Yuan Dharma lecture conference briefing

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