Revenue and Profit Both Hit Quarterly Highs
ChunghwaPrecision Test reported third-quarter consolidated revenue of 19.05億元, up 16.2% QoQ and 53.4% YoY, with net profit attributable to parent of 5.51億元, up 11.5% QoQ and 100% YoY, and EPS of 16.75元, doubling from 8.41元 a year earlier, with both revenue and profit hitting record quarterly highs. Third-quarter gross margin was 57.3%, down 0.2 percentage points QoQ and up 1 percentage point YoY, operating margin held at about 35%, and operating expense ratio fell to about 22%, down about 10 percentage points YoY, with profit growth outpacing revenue, reflecting scale benefits.
HPC Share Rises to 65.9%
By application mix, high-performance computing rose from 56.3% of total revenue in the second quarter to 65.9% in the third quarter, becoming the main growth engine. General Manager Huang Shuike said demand covers GPU, TPU, switches, AI ASICs and automotive AI chips, with multiple customer orders contributing. During a recent U.S. visit to about seven to eight international majors, the demand signals received were positive, with the key issue remaining insufficient capacity, and AI application deployment expected to continue driving semiconductors and related industries, though growth still depends on power, raw materials and other supply conditions.
Capacity Doubling to Support 50% Growth Next Year and Year After
To meet orders, ChunghwaPrecision Test continues to expand capacity. Sales Division Head Chu Yu-hsien said taking end-2025 capacity as 1, capacity had reached 2 after the August 2026 expansion and is expected to reach 3 in the first quarter of 2027, with progress in line with expectations, though there is about a one-quarter lag from expansion completion to revenue recognition. The third plant will be larger than the two existing leased plants, with the Longtan second plant expected not to be renewed, while renewal of the first plant will depend on operations. The company expects 2026 revenue to grow toward 50%, and 2027 to also be cautiously optimistic for close to 50% growth based on secured orders, with earnings potentially growing at an even larger rate.
New Product Ramp May Weigh on Gross Margin
New product ramp will affect profit structure. Huang Shuike noted that the slight third-quarter gross margin decline was related to new products beginning to recognize revenue. CFO Hsu Yi-ping explained that burn-in boards only began shipping in September, with limited impact in the third quarter, but new products initially carry below-average gross margins, and fourth-quarter gross margin may return to the long-term target of 50% to 55%, depending on product mix. For 2027, the operating expense ratio is guided at 20% to 25%, covering next-generation AI ASIC probe cards and test load board R&D, headcount additions and high-speed high-current probe card qualification. In addition, due to new customer ramp-up and customer-supplied material delays, inventories increased and operating cash inflow was low, with expanded capital spending; 2026 depreciation is estimated at about 4.1億元, while inventories and free cash flow are expected to improve in 2027.