YungChieh Q2 Net Profit Soars Over 200% Year-on-Year to NT$690 Million, EPS NT$9.76; AI Servers and ASIC Projects to Drive Growth in Second Half

Server manufacturer YungChieh (7711-TW) released its second-quarter financial results today (4th), reporting a net profit of NT$690 million, representing a 26.9% increase quarter-on-quarter and a 234.6% surge year-on-year, with earnings per share (EPS) at NT$9.76. The company noted that the revenue mix has shifted toward general-purpose servers, which, despite an overall revenue decline, has contributed to improved profitability. Looking ahead to the second half, if AI chip supply constraints ease, YungChieh expects stronger shipments of AI servers and volume production of ASIC products, maintaining an optimistic outlook for future performance.

YungChieh's Q2 revenue reached NT$6.82 billion, down 23.3% quarter-on-quarter but up 9.2% year-on-year. Gross margin improved to 18.9%, up 6.6 percentage points from the previous quarter and 12.2 percentage points year-on-year. Operating profit stood at NT$820 million, up 17.7% quarter-on-quarter and 495.5% year-on-year, with an operating margin of 12.0%, up 4.2 and 9.8 percentage points respectively. Net profit after tax was NT$690 million, with EPS at NT$9.76.

For the first half of 2023, cumulative revenue reached NT$15.71 billion, up 44.5% year-on-year. Gross margin was 15.2%, up 7.1 percentage points from the same period last year. Operating profit was NT$1.512662 billion, up 336.3% year-on-year, with an operating margin of 9.6%, up 6.4 percentage points. Net profit after tax was NT$1.22 billion, up 205.7% year-on-year, with EPS at NT$17.44.

YungChieh explained that in Q2, due to chip supply constraints, the product mix shifted toward general-purpose servers, which now account for 30% of revenue. Although total revenue declined, this shift significantly boosted profitability.

For the second half outlook, the company expects that improved chip supply from NVIDIA (NVDA-US) and AMD (AMD-US) will enable volume ramp-up of AI server products. Additionally, customer ASIC products are scheduled to enter mass production in Q3 and Q4, contributing positively to profitability.