Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>2024 Cash Dividend is NT$28, with payout ratio slightly increased to 83.76%. 2Q25 Guidance Revenue: NT$26.5–27.7bn / US$828–866mn (vs. ~US$830mn in 1Q24), Gross Margin is 37–40% and OPM is 18.5–21.5%.</li>
<li>100% of sales and cost are denominated in USD. A 1% appreciation of the  TWD implies a 0.2% decrease in net income.</li>
<li>2H25 Outlook: Visibility remains low, and tariffs continue to be the key uncertainty.</li>
</ul>


2024 Cash Dividend is NT$28, with payout ratio slightly increased to 83.76%. 2Q25 Guidance Revenue: NT$26.5–27.7bn / US$828–866mn (vs. ~US$830mn in 1Q24), Gross Margin is 37–40% and OPM is 18.5–21.5%.
100% of sales and cost are denominated in USD. A 1% appreciation of the  TWD implies a 0.2% decrease in net income.
2H25 Outlook: Visibility remains low, and tariffs continue to be the key uncertainty.


Novatek (3034.TT): US Tariffs Remain the Key Uncertainty.

<ul>
<li>US-China trade war has led to tariff uncertainties. China's subsidy program has stimulated pre-purchasing by customers in 1Q25, resulting in increased demand for televisions, tablets, phones, and IT products. </li>
<li>All three major product lines have shown seasonal growth. which LDDI has shown the largest growth, SoC follows closely, and SMDDI has lower growth.</li>
<li>DeepSeek will accelerate the implementation and popularization of AI applications, benefiting the company.</li>
</ul>


US-China trade war has led to tariff uncertainties. China's subsidy program has stimulated pre-purchasing by customers in 1Q25, resulting in increased demand for televisions, tablets, phones, and IT products. 
All three major product lines have shown seasonal growth. which LDDI has shown the largest growth, SoC follows closely, and SMDDI has lower growth.
DeepSeek will accelerate the implementation and popularization of AI applications, benefiting the company.


Novatek (3034.TT): The Outlook 1Q25 Is Showing Surprising Upside Due to the China Subsidy Program.

<ul>
<li>The 1Q25 outlook is expected to see a 0-5% decline quarter-over-quarter due to the recent earthquake in southern Taiwan.  </li>
<li>Factors such as increased demand related to <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple (AAPL US)</a>  iPhone production and subsidies for China's electronics industry are expected to boost Novatek's output in 1Q25.</li>
<li>US President Donald Trump has expressed dissatisfaction with Taiwan's increasing dominance in the semiconductor manufacturing sector.</li>
</ul>


The 1Q25 outlook is expected to see a 0-5% decline quarter-over-quarter due to the recent earthquake in southern Taiwan.  
Factors such as increased demand related to Apple (AAPL US)  iPhone production and subsidies for China's electronics industry are expected to boost Novatek's output in 1Q25.
US President Donald Trump has expressed dissatisfaction with Taiwan's increasing dominance in the semiconductor manufacturing sector.


Novatek (3034.TT): Earthquake Affecting 1Q25 Outlook; Benefited by Subsidies for China's Electronics

<ul>
<li>Novatek Microelectronics Corp (3034 TT) 1Q25 demand has surged abruptly, with a likely 5% quarter-over-quarter shipment increase.  </li>
<li>China's substantial demand is capable of supporting a Fabless leader like Novatek.  </li>
<li>The unexpected demand surge in 1Q25 has greatly benefited Novatek .  </li>
</ul>


Novatek Microelectronics Corp (3034 TT) 1Q25 demand has surged abruptly, with a likely 5% quarter-over-quarter shipment increase.  
China's substantial demand is capable of supporting a Fabless leader like Novatek.  
The unexpected demand surge in 1Q25 has greatly benefited Novatek .  


Novatek (3034.TT): Rush Orders Received and Beneficial from Chinese Household Electronic Demand.

Technology / Semiconductor / Internet Research

Nicolas Baratte

<ul>
<li>IDC reported 3Q24 PC shipments declining -2% YoY, Canalys an increase of +1%. Let’s call this flat. If 4Q24 is “average seasonal”, 2024 will reach ~265m, or the pre-Covid range. </li>
<li>No AI fever, no accelerated replacement cycle, for now. If it happens, it will take time, ie compelling AI apps that only run locally and need a new PC.</li>
<li>In Asia, PC vendors: Lenovo, Acer, Asus. Taiwan ODM: Compal, Quanta, Wistron. Semi with high exposure: Novatek, Realtek. </li>
</ul>


IDC reported 3Q24 PC shipments declining -2% YoY, Canalys an increase of +1%. Let’s call this flat. If 4Q24 is “average seasonal”, 2024 will reach ~265m, or the pre-Covid range. 
No AI fever, no accelerated replacement cycle, for now. If it happens, it will take time, ie compelling AI apps that only run locally and need a new PC.
In Asia, PC vendors: Lenovo, Acer, Asus. Taiwan ODM: Compal, Quanta, Wistron. Semi with high exposure: Novatek, Realtek. 


3Q24 PC Shipments Are Flat YoY. Lenovo, Acer, Asus. Compal, Quanta, Wistron.

Taiwan

Novatek Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs).  The Company's products are used in telecommunication, computer peripherals, and LCD (liquid crystal display) drivers.

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Novatek Microelectronics Corp (3034 TT)

Novatek (3034.TT): US Tariffs Remain the Key Uncertainty.

2024 payout ratio 83.76%. 2Q25 Revenue guidance NT$26.5–27.7bn / US$828–866mn, Gross Margin 37–40%, OPM 18.5–21.5%. Sales and cost in USD, 1% TWD...

Patrick Liao

Novatek (3034.TT): The Outlook 1Q25 Is Showing Surprising Upside Due to the China Subsidy Program.

US-China trade war sparks tariff uncertainties, leading to increased demand for tech products in 1Q25. LDDI sees largest growth, SoC follows,...

Patrick Liao

Novatek (3034.TT): Earthquake Affecting 1Q25 Outlook; Benefited by Subsidies for China's Electronics

1Q25 outlook for Novatek expected to decline 0-5% due to Taiwan earthquake, but boosted by Apple demand and China subsidies. Trump unhappy with...

Patrick Liao

Novatek (3034.TT): Rush Orders Received and Beneficial from Chinese Household Electronic Demand.

Novatek Microelectronics Corp (3034 TT) experiences a sudden surge in demand in 1Q25, likely leading to a 5% increase in shipments, supported by...

Patrick Liao

3Q24 PC Shipments Are Flat YoY. Lenovo, Acer, Asus. Compal, Quanta, Wistron.

3Q24 PC shipments are flat YoY. The great recovery or AI replacement cycle aren’t happening (for now). IDC reported 3Q24 PC shipments declining -2%...

Nicolas Baratte

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Novatek (3034.TT): US Tariffs Remain the Key Uncertainty.

​2024 payout ratio 83.76%. 2Q25 Revenue guidance NT$26.5–27.7bn / US$828–866mn, Gross Margin 37–40%, OPM 18.5–21.5%. Sales and cost in USD, 1% TWD...

Patrick Liao

Novatek (3034.TT): The Outlook 1Q25 Is Showing Surprising Upside Due to the China Subsidy Program.

​US-China trade war sparks tariff uncertainties, leading to increased demand for tech products in 1Q25. LDDI sees largest growth, SoC follows,...

Patrick Liao

Novatek (3034.TT): Earthquake Affecting 1Q25 Outlook; Benefited by Subsidies for China's Electronics

​1Q25 outlook for Novatek expected to decline 0-5% due to Taiwan earthquake, but boosted by Apple demand and China subsidies. Trump unhappy with...

Patrick Liao

Novatek (3034.TT): Rush Orders Received and Beneficial from Chinese Household Electronic Demand.

​Novatek Microelectronics Corp (3034 TT) experiences a sudden surge in demand in 1Q25, likely leading to a 5% increase in shipments, supported by...

Patrick Liao

3Q24 PC Shipments Are Flat YoY. Lenovo, Acer, Asus. Compal, Quanta, Wistron.

3Q24 PC shipments are flat YoY. The great recovery or AI replacement cycle aren’t happening (for now). IDC reported 3Q24 PC shipments declining -2%...

Nicolas Baratte

2024 payout ratio 83.76%. 2Q25 Revenue guidance NT$26.5–27.7bn / US$828–866mn, Gross Margin 37–40%, OPM 18.5–21.5%. Sales and cost in USD, 1% TWD...

US-China trade war sparks tariff uncertainties, leading to increased demand for tech products in 1Q25. LDDI sees largest growth, SoC follows,...

1Q25 outlook for Novatek expected to decline 0-5% due to Taiwan earthquake, but boosted by Apple demand and China subsidies. Trump unhappy with...

Novatek Microelectronics Corp (3034 TT) experiences a sudden surge in demand in 1Q25, likely leading to a 5% increase in shipments, supported by...