Advantech Targets Double-Digit Revenue Growth on AI and Chip Demand

Industrial PC maker Advantech Co posted an 83 percent year-on-year revenue jump to NT$32.44 billion (US$988.39 million) in the third quarter and is targeting double-digit revenue growth next year. The company cited robust demand for semiconductor equipment, AI data centers, medical equipment and factory automation.

Advantech embedded Internet of Things president Miller Chang told an earnings conference that the semiconductor-related business, spanning industrial controllers and industrial servers, should remain a key growth driver this quarter and through next year.

Semiconductor-related products accounted for about 15 percent of total revenue in the first three quarters, Chang said. Edge AI products took 24.5 percent of revenue over the same period, and the company expects that share to reach 30 percent by year-end.

How large is the robotics push?

Advantech has increased investment in physical AI, edge AI, AI factories and robotics. The company expects more than 150 robotics-related projects in its pipeline for the full year, Chang said.

Revenue rose 49 percent to NT$78.95 billion in the first nine months. President Eric Chen said fourth-quarter revenue should range between US$970 million and US$990 million.

North America generated 33 percent of revenue in the first nine months. China followed with 22 percent and Europe with 15 percent. The company secured about 161 design contracts in North America in the first three quarters, expected to generate US$687 million in revenue and support growth momentum.

Net profit last quarter climbed 37.7 percent from the previous quarter and 125 percent year-on-year to NT$6.21 billion. Earnings per share reached a record NT$7.15, up from NT$5.2 the previous quarter and NT$3.2 a year earlier.

What squeezed margins?

Gross margin fell to 36.7 percent last quarter from 37.7 percent as component costs rose. Chen blamed higher prices for solid-state drives, memory chips and central processing units. Such components once made up about 30 percent of product costs; that proportion has climbed to roughly 80 percent.

Advantech expects gross margin between 36 percent and 38 percent this quarter, supported by product price increases, Chen said.

MediaTek adds second ASIC customer

Chip designer MediaTek Inc said it has secured a second customer for its customized AI accelerator for data centers. Volume production of a second-generation chip for an existing customer remains on track for early 2028, easing market concerns about delays.

The new customer is not from China, MediaTek said. The statement was intended to dismiss speculation that ByteDance Ltd, the parent of TikTok, was the second customer for the customized AI ASIC business.

"It is on track, on schedule. We understand there is some noise about the" program, chief executive officer Rick Tsai said, adding that TSMC "remains our most important partner" as MediaTek seeks to meet robust customer demand.

ASE raises capex to US$11.5 billion

ASE Technology Holding Co raised its annual capital expenditure budget for the third time, to US$11.5 billion. The world's largest chip packaging and testing provider added US$1 billion to a prior US$10.5 billion outlay on expectations that customer demand next year would continue to outpace capacity, particularly for leading-edge advanced packaging technologies used in AI chips.

About 60 percent of a US$500 million equipment budget would go to leading-edge advanced packaging and 40 percent to mainstream packaging capacity, chief financial officer Joseph Tung told an online investors' conference. He said the company's biggest bottleneck is still space and it is scouting existing factories to acquire.

TAIEX faces pressure after TSMC ADR drop

The TAIEX is expected to face heavy downward pressure after TSMC American depositary receipts fell 5.95 percent on Friday, tracking a broader Wall Street sell-off amid concerns over massive AI spending. Disappointing sales at some US technology companies spurred the worst stock drop since June. The NASDAQ Composite fell 2.86 percent, the Philadelphia Semiconductor Index plunged 7.20 percent and the S&P 500 dropped 1.8 percent, breaching its 100-day moving average. Analysts said Taiwan's market would not be spared.

Advantech enters that turbulence with record quarterly earnings, a 30 percent edge AI revenue share in sight, and pricing power it says will hold margins near 37 percent through the current quarter.