M31 Q3 Profit Surged Over 50%, Accumulated EPS NT$9.34

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Nov. 15, 2023 – 

Hsinchu, Taiwan -- November 15, 2023 -- M31 Technology Corporation (M31), a leading global supplier of silicon intellectual property (IP), at today’s earning conference (11/09), announced that the revenue for the third quarter of 2023 increased by 33.7% YoY to NT$432 million, and EPS (after tax) amounted to NT$4.45. In the third quarter, overall operating margin and net profit margin attributable to the parent company increased significantly compared to the previous quarter and the same period last year, benefiting from effective cost control and favorable foreign exchange rates, as well as maintained a 100% gross profit margin. Cumulatively, in the first three quarters, the revenue reached NT$1.093 billion, an increase of 25.5% YoY, and EPS of NT$9.34, setting a new historical record for the same period.

Looking at the third quarter revenue, although the growth momentum of M31 has been suppressed by the impact of the decline in foundry capacity utilization, it has gradually recovered compared to the quarterly decline in the previous quarter, indicating that as customers' inventory adjustments gradually come to an end, royalties are expected to return to the growth cycle. In terms of regional market performance, M31's China revenue grew in the third quarter as demand from SoC customers in China rebounded. Although this year's revenue performance in the U.S. market is not as expected, M31 is expected to benefit from the significant achievements of expanding adoption of M31's advanced process IP by key U.S. customers and major wins with new customers from top-tier manufacturers. This is anticipated to contribute to deferred orders, which makes M31's outlook for the U.S. market quite positive. On the other hand, M31's continuous investment in R&D of below-16nm FinFET process platforms has yielded results, advanced process accounted for nearly half of M31's total licensing revenue in the third quarter, becoming the primary growth driver for licensing revenue. Meanwhile, demand for mature processes continues to be strong, whether chip designer companies are shifting towards cost-effective/cost-efficient 22/28nm process platforms, or foundries are actively strengthening special processes tailored for specific applications, all of these are laying a solid foundation for M31's profit growth and also reflects that M31's long-term R&D investment is yielding positive outcomes.

Worth mentioning is that M31 established its first overseas R&D center in Bangalore, India, last month, focusing on advanced process Foundation IP design R&D. The establishment of this overseas R&D center is a crucial cornerstone for M31's global expansion, demonstrating M31's proactive strategy to recruit top design talents worldwide to address the demands of emerging applications. Scott Chang, CEO of M31, stated that the demand for customized and high-unit-price IP from applications is growing rapidly, and M31 has recently achieved results in a number of projects, including penetration into new platforms for foundry customers, continuous adoption of IPs with below 6nm process into the design of high-end applications such as autonomous driving, data centers, and smartphones, as well as steady growth in market share in China, which are expected to lead to medium- and long-term revenue contributions. In addition, M31 has received the Specialty Process IP Partner Award from TSMC for the sixth consecutive year this year. This recognition, stemming from the long-term partnership established in advanced processes and with foundries, provides optimism for future annual revenue to continue achieving double-digit growth and new record highs.

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