Chicony's Q2 EPS NT$3.06, up 53% QoQ; H1 EPS NT$5.06, exceeding half of share capital

Chicony's Q2 EPS NT$3.06, a significant 53% surge from the previous quarter

Global leading electronic components manufacturer Chicony Electronics (2385) today announced its 2Q26 financial report. Revenue was NT$22.388 billion. This quarter's profit performance was good. Net profit after tax was NT$2.241 billion and EPS was NT$3.06, representing a quarter-on-quarter increase of 54% and 53%, respectively, and a year-on-year increase of 4% and 3%, respectively. The net profit margin reached 10.0%, a quarter-on-quarter increase of 3.6 percentage points and a year-on-year increase of 1.2 percentage points. Total revenue for the first half of the year was NT$45.259 billion, and net profit after tax of NT$3.697 billion. The net profit margin was 8.2%, and EPS was NT$5.06. For three consecutive years, the EPS in the first-half reports has exceeded half of the share capital.

Commercial demand outperforms consumer demand

Smart video systems and gaming keyboards perform outstandingly

In Q2, end-user demand slowed, suppressed by soaring DRAM prices; however, the commercial market still outperformed the consumer market. Among Chicony's imaging products, smart video conferencing systems performed the best, achieving strong year-on-year growth of over 20% in both Q2 and the first half of the year; In addition, among keyboard products, gaming keyboards led the way, achieving high single-digit YoY growth in Q2. The LED backlight module adoption rate for NB keyboards remained above 50% in Q2, highlighting that commercial models continue to be the primary shipments for clients.

Driven by dual engines of commercial PC replacement and AI PCs, Chicony lays out a comprehensive and pragmatic response to structural transformation

Looking ahead, Chicony has a positive view of the growth momentum in the high-end market, anticipating that Edge AI and the commercial market will become important pillars in the second half of the year. Although total global PC shipments were affected by memory cost inflation, leading to shipment pressure on entry-level laptops, the commercial replacement cycle has demonstrated relatively robust price resilience, effectively supporting the high-value product portfolio. Concurrently, as the global AI PC market penetration rate is expected to exceed the critical threshold of 55% by the end of 2024, the widespread adoption of high-end and commercial models will lead the market towards a structural transformation characterized by higher average selling prices. In response to this market transformation, Chicony has already initiated corresponding plans. The Company will pragmatically address the challenges of transformation and maintain stable operations amidst the changing market environment.

Smart security and video conferencing segments remain stable; new orders for Chicony's Thailand plant support short-term supply chain adjustments

In its Edge AI Vision business, Chicony maintains its existing dynamic adjustment capabilities. Although clients are facing a global memory shortage, leading to delays in their final assembly lines and consequently postponing Chicony's imaging product shipment schedule, Chicony has continued to stably ship smart security and smart video conferencing systems, which have high entry barriers, to tier-one manufacturers in the US and Europe within niche vertical markets. Furthermore, Chicony successfully undertook transfer orders designated by clients for production at its Thailand plant. Supported by a diversified production site layout and high-end AI imaging products, the overall B2B business has maintained steady progress.

Edge AI imaging layout extends to unlock robotics applications

Chicony possesses profound R&D capabilities in software and hardware imaging. In recent years, it has combined edge AI with Visual Language Models (VLMs), utilizing "sensor fusion" technology for deep learning and integrating diverse sensor data. Its "Edge AI Imaging Solution" has been widely applied in markets such as smart security, smart video, fleet management, and smart wearables. Recently, it has further collaborated with a US-based startup, successfully extending its reach into the robotics field. By configuring a series of cameras, Chicony assists robots in performing precise visual recognition and analysis in diverse scenarios, thereby guiding subsequent actions and effectively aiding in delicate operations and force control. Chicony is fully empowering its imaging products with AI, endowing devices with acute judgment of the overall environment, allowing robots to be upgraded into truly highly productive partners and become indispensable core edge devices for the commercialization of "Physical AI".

Chicony announced today its unaudited consolidated revenue for July was NT$7.057 billion, and its cumulative unaudited consolidated revenue from January to July reached NT$52.316 billion. Facing fluctuations in raw material prices, the price adjustment plan Chicony promoted this year is currently progressing step by step according to schedule. Some products have already begun to reflect the adjustments starting in Q2; however, due to client inventory digestion cycles and the progress of contract conversions, the full realization of the overall price adjustment benefits will still require time. It is expected that more products will progressively reflect the new prices in Q3. Looking ahead to Q3, end-user demand remains weak due to high DRAM prices. Institutional investors estimate Chicony's revenue will be flat or slightly increase compared to the previous quarter. Although the benefits of price increases are materializing with a delay, profit performance in Q3 will be constrained by cautious growth in customer orders, and the primary goal will be to "strive for stability and demonstrate operational resilience."