Taiwanese semiconductor firm Vanguard reported declining quarterly profits. However, strong AI demand boosts the company’s future outlook. The foundry service provider announced third quarter results yesterday. Net profit fell to NT$1.69 billion recently. This represents a significant twenty percent annual decrease.
Nevertheless, AI demand boosts the company’s recovery prospects. Chairman Fang Leuh expressed cautious optimism during an earnings call. He expects moderate seasonal corrections ahead. Most customers will complete inventory adjustments soon. Consequently, no major downturn is anticipated.
Furthermore, global AI infrastructure deployment continues expanding. This AI demand boosts Vanguard’s power management chip business. AI-related revenue reached high-single-digit percentages this year. It was only low-single-digits previously. Semiconductors remain vital for AI hardware investment.
The company holds an advantageous market position. It supplies chips for data centers and AI servers. Next year’s growth looks promising according to management. Global economic expansion should reach 3.1 percent. Semiconductor industry growth could hit high-teens percentages.
Meanwhile, current quarter performance shows mixed signals. Wafer shipments will decline six to eight percent. Seasonal weakness and inventory adjustments cause this drop. However, average prices will increase four to six percent. A better product mix drives this improvement.
Gross margins should also rise slightly. They may reach 27.5 percent this quarter. Last quarter’s margin was 26.8 percent. A weaker Taiwan dollar helps profitability. Stable automotive and industrial demand provides support.
Additionally, display driver chips face ongoing challenges. But power management chips show consistent strength. The company maintains three months of order visibility. This provides reasonable short-term predictability.
Capital expenditure plans remain unchanged. Vanguard will spend NT$65 to NT$70 billion this year. Ninety percent funds their Singapore wafer fab. This first twelve-inch facility progresses on schedule. Volume production should begin in 2027.
The semiconductor industry faces cyclical pressures currently. However, artificial intelligence represents a bright spot. Vanguard’s specialization positions it well strategically. Power management needs grow with AI adoption.
Company leadership appears confident about future prospects. They emphasize their technological capabilities repeatedly. The Singapore expansion supports long-term growth ambitions. Global semiconductor recovery should benefit Vanguard significantly.
Investors received the earnings report positively overall. While profits declined as expected, the AI-driven outlook reassured markets. The stock showed resilience during trading yesterday. Analysts will monitor execution closely moving forward.
