Second Quarter 2019 and Recent Company Highlights
- A new low-Rss (on)* LV (Low Voltage) MOSFET with reduced chip size for smartphone battery PCMs (Protection Circuit Modules). Extended life and increased protection for batteries in high-end LTE and 5G smartphones are becoming increasingly important. 5G phones, in particular, need longer-lasting batteries with higher endurance than previous smartphones to process the massive amount of data with extremely fast download and upload capabilities. Inserted in the battery PCMs in LTE or 5G phones, this newly released MOSFET prevents over-voltage and over-current of the batteries and ultimately helps extend their life and resolve the overheating issue.
- An update to its previous guidance for the second quarter of 2019. Revenue in the second quarter of 2019, ending June 30, is now expected to be at least $194 million, and gross profit margin is expected to be at least 21%. This updated guidance for the second quarter compares to the Company's previous guidance of revenue to be in the range of $173-181 million and gross profit margin to be in the range of 16-18%. The previous revenue guidance provided on April 30 in conjunction with the public release of the financial results for the first quarter of 2019 reflected an expectation at that time that revenue from MagnaChip's OLED Display drivers would increase by approximately 30% and that revenue from the Foundry business would be flat, both as compared to the first quarter of 2019. However, revenue for both OLED Display drivers and 8" Foundry services is now expected to substantially exceed the Company's previously anticipated financial results for the second quarter. Revenue from Power standard products is also expected to be stronger than previously anticipated.
MagnaChip also stated today that the strategic evaluation of its Foundry business and Fab 4, the larger of the Company's two 8" manufacturing facilities, is ongoing. Fab 4 is an analog and mixed-signal fab that produces approximately 73% of the Company's total capacity, and is used primarily to meet wafer demand from Foundry customers that rely on outside suppliers. As previously announced, the strategic evaluation includes a range of possible options, including, but not limited to, joint ventures, strategic partnerships and M&A possibilities. MagnaChip's updated revenue and gross profit margin guidance for the second quarter of 2019 is not a comprehensive statement of financial results, and actual figures may vary.
- The launch of its 28-nanometer (nm) OLED (Organic Light Emitting Diodes) DDIC (Display Driver IC) for smartphone displays.
The 28nm process is the most advanced process used for manufacturing OLED DDICs today. The new 28nm OLED DDIC achieves a form factor reduction that is 20 percent smaller than that of the previous 40nm process and is suitable for smartphones and other mobile devices, where small size and thinness are critical factors. In addition, MagnaChip reduced the logic voltage from 1.1V, which was required for the existing 40nm products, to 1.0V, which reduces the current voltage consumption by more than 20 percent and also extends battery life.
- The offering of its second-generation 0.13 micron eFlash (Embedded Flash) technology with 20V and 30V high-voltage options. The technology is specifically designed to address the needs for multi-function hybrid mixed-signal products, including touch ICs, fingerprint readout ICs and wireless power charger ICs. With the growing complexity of analog and mixed-signal functions, IC designers are facing increasing challenges to integrate multiple functions in a single product.
- The launch of a 3-channel BLU (backlight unit) LED driver for UHD TVs.
For high-resolution UHD displays, this new standard display product is designed to control the local LED dimming of up to 270 LEDs through a maximum of 90 LEDs per channel. In addition, it provides a dual dimming solution with Analog and PWM (Pulse Width Modulation) for efficient and stable LED dimming, which reduces power consumption and helps achieve a high contrast ratio in UHD TVs.
- A new initiative to partner with companies in the development of next-generation display features of smartphones and other mobile or handheld consumer electronic devices. MagnaChip intends to develop individual strategic partnerships with leading manufacturers of touch, stylus, fingerprint technologies, and associated OLED display technologies. Each company will collaborate with MagnaChip to develop and standardize innovative human-interface solutions based upon smart touch, stylus and fingerprint technologies that are suitable for MagnaChip's industry leading OLED DDICs. The goal in each instance will be to improve the functionality of OLED displays on end user devices. There also will be a specified collaboration in shared intellectual property that will extend into new applications, including the IoT and automotive sectors.
- A partnership with ELAN Microelectronics Corp. to expand the capabilities for OLED displays for a wide variety of next-generation consumer, communication, computing and industrial products, as well as for automotive displays. The partnership seeks to build upon the recent growth and market penetration of OLED displays in areas such as smartphones, mobile devices, tablets and automotive applications, ranging from navigation and infotainment screens to brake light and interior lighting systems.
- A partnership with HiDeep to develop advanced OLED display capabilities for smartphone makers and other handheld consumer electronics devices. MagnaChip will cooperate with HiDeep to develop enhanced HMI solutions optimized for the growing OLED display market. Specifically, MagnaChip and HiDeep will collaborate and create useful and cost effective new HMI solutions for flexible OLED displays for top-tier panel makers and smartphone OEMs. This collaboration also will extend into a variety of other applications and end markets. http://investors.magnachip.com/news-releases/news-release-details/magnachip-and-hideep-inc-announce-partnership-develop-enhanced
- A partnership with Melfas Inc. to develop advanced OLED display capabilities for the automotive and consumer electronics sectors. Currently, OLED technology is deployed primarily in televisions and mobile products such as smartphones and smartwatches, but MagnaChip and Melfas are working towards developing automotive display-related solutions in an effort to respond to this fast-growing market. With their current solutions, the two companies will initially address opportunities in consumer electronics and, going forward, will work together to develop solutions for OLED displays in automotive applications.
Second Quarter 2019 Earnings Conference Call
The earnings conference call will be webcast live today (July 30, 2019) at 5:00 p.m. EDT, and also is available by dialing toll-free at 1-844-536-5472. International call-in participants can dial 1-614-999-9318. The conference ID number is 8938259. Participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. ET start time to ensure a timely connection. The webcast and earnings release will be accessible at www.magnachip.com. A replay of the conference call will be available the same day and will run for 72 hours. The replay dial-in numbers are 1-404-537-3406 or toll-free at 1-855-859-2056. The access code is 8938259.
About MagnaChip Semiconductor Corporation
MagnaChip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, industrial and automotive applications. The Company's Standard Products Group and Foundry Services Group provide a broad range of standard products and manufacturing services to customers worldwide. MagnaChip, with about 40 years of operating history, owns a portfolio of approximately 3,000 registered patents and pending applications, and has extensive engineering, design and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through, MagnaChip's website is not a part of, and is not incorporated into, this release.
Safe Harbor for Forward-Looking Statements
Information in this release regarding MagnaChip's forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about our future operating and financial performance, including but not limited to third quarter 2019 revenue and gross profit margin expectations. All forward-looking statements included in this release are based upon information available to MagnaChip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip's filings with the SEC, including our Form 10-K filed on February 22, 2019 and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. MagnaChip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.