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on February 2th

Realtek's revenue in 2023 exceeded NT $95.1 billion, with a 43% decrease in net profit

Realtek held a legal conference on February 1st to release its financial reports for the fourth quarter and full year of 2023. The company's consolidated revenue in 2023 was NT $95.179 billion, a decrease of 14.9% annually; After tax net profit was 9.153 billion yuan, a decrease of 43.5%; The average gross profit margin is 42.8%, with an annual decrease of 6.1%; The net profit per share is 17.85 yuan, the lowest point in three years. Realtek Wi Fi 7 certification is expected to be completed this quarter.

Huang Yiwei, Deputy General Manager of Realtek, believes that looking ahead to this quarter, Realtek should take a cautious approach and expects to resume growth this year. Driven by the shipment of network communication and automotive products, it is expected that growth momentum will resume throughout 2024.

In the fourth quarter of 2023, Realtek's consolidated quarterly revenue was 22.585 billion yuan, a quarterly decrease of 15.3%, and an annual decrease of 3.8%; The gross profit margin was 44.7%, with a quarterly increase of 2.7%. Non operating income reached 1.157 billion yuan, with a quarterly increase of 66.0%. The main reasons were an increase in investment profits, an increase in financial assets, and recognition of compensation income from manufacturers. The net profit after tax of Realtek for the quarter was 2.18 billion yuan, a decrease of 15.2%, a year-on-year increase of 9.8%, and a net profit of 4.25 yuan per share.

Regarding the future outlook, Realtek's Huang Yiwei pointed out that related product lines such as PC, TV, network communication, and automotive are expected to recover growth momentum. Among them, the growth momentum of the network communication and automotive markets is expected to be more significant than that of consumer grade products and PCs. The network communication market will benefit from demand driven by Wi Fi, Ethernet networks, switches, and bidding cases from Chinese telecommunications companies.

Realtek observes the Wi Fi market and currently, there is a significant price difference for Wi Fi 4, 5, 6/6E, and 7 generations. Therefore, various Wi Fi specifications are expected to dominate the demand for existing Wi Fi terminals. The Realtek Wi Fi 7 specification certification is expected to end by the end of the first quarter of 2024, which also represents the possibility of mass production and shipment this year.

In terms of the automotive market, although there has been a temporary inventory adjustment in the market, Realtek related products have not encountered any related problems. Both PHY and Ethernet networks have shown growth momentum higher than the company's average level, and OEM and Tier component factories have begun to introduce Wi Fi and audio chips into automotive products. It is expected to contribute to performance as early as 2025. From a long-term perspective, it is expected to drive more Realtek products into the automotive market.

Regarding the topic of artificial intelligence (AI), Realtek's Huang Yiwei believes that we should not overestimate the impact of AI PCs on the PC market, as the current definition of AI PCs is still quite vague. At the earliest in the second half of 2024, new platforms launched by Qualcomm, AMD, and Intel will meet the hardware specifications required for AI PCs, and such products will not bring additional revenue in the short term. But from a long-term perspective, AI enabled PCs can indeed be seen as driving the evolution of the next generation of PCs.
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