GigaDevice 1H23: Revenue Decline, MCU Thrives in Auto & Edge AI

GigaDevice, a prominent player in China's memory and microcontroller (MCU) industry, has unveiled its operational performance for the first half of 2023. The company experienced a decline of nearly 40% in revenue compared to the same period in 2022, accompanied by a significant drop of around 80% in net profit. This downturn can be attributed to a notable decrease in demand from consumer and industrial control markets, resulting in pricing pressures and consequent declines in revenue and gross profit margins.

During the initial half of 2023, GigaDevice reported a revenue of ¥2.966 billion, reflecting a 37.97% year-on-year decrease. The net profit attributed to the company amounted to ¥336 million, marking a substantial decline of 78%. Interestingly, GigaDevice also witnessed a similar downturn of almost 40% in revenue and net profit during the first quarter of the year. However, the company displayed a commendable recovery in revenue growth, achieving a 23% increase during the second quarter.

GigaDevice acknowledged the lackluster performance of the consumer electronics market and the suboptimal demand within the industrial sector, both of which contributed to the current scenario. This led to a phase of inventory management and adjustment within the industry. Despite these challenges, the second quarter saw promising growth in shipments across diverse markets, including mobile, consumer, computing, industrial, and automotive sectors.

In terms of its three primary business segments, GigaDevice reiterated its commitment to cultivating the high-end consumer market for memory products. This endeavor resulted in growth in sectors such as networking and automotive. The company further expressed intentions to explore international markets as part of its strategic expansion plans. In the realm of sensors, GigaDevice acknowledged a moderate demand in the mobile terminal market, while observing an impressive 60% growth in sensor product line shipments during the second quarter as compared to the previous quarter.

Within the MCU product category, the industrial sector continued to be a major contributor to revenue. GigaDevice noted growth in shipments across various sectors, including consumer, mobile, computing, and automotive markets during the second quarter, surpassing the shipments from the initial quarter. The cumulative shipments of MCU products have now crossed the remarkable milestone of 1.3 billion units.

GigaDevice's strategic positioning reflects its anticipation of the expansion of China's new energy vehicle market and the ongoing surge in AI technology. Since the launch of automotive MCU products in September 2022, GigaDevice has been actively collaborating with China's Tier1 platforms. Its MCU products have been integrated into vehicles manufactured by notable companies including NIO, BYD, and others.

In the domain of edge AI, GigaDevice's GD32H7 series MCU stands out, tailored for high-end applications like digital signal processing, PLC motor frequency conversion, SMPS power supply, energy storage systems, audiovisual systems, graphics, and imaging. With impressive attributes such as high frequency and ample storage capacity, this MCU series finds relevance in advanced innovation scenarios like machine learning and artificial intelligence.

It's pertinent to note that Jin Guang, GigaDevice's Director of Product Marketing, highlighted distinctions between AI and ChatGPT. While ChatGPT symbolizes high computational power models, the MCU industry centers its attention on edge AI, emphasizing real-time capabilities and specific power consumption requisites.

Looking ahead, GigaDevice envisions an expanded focus on high-end electronic R&D for automotive applications. This expanded endeavor is set to encompass not only vehicle main control units but also entertainment systems within vehicles, including car navigation and radio systems. Furthermore, GigaDevice's strategic roadmap includes the development of low-power AI MCU products to cater to the burgeoning AI market.