Nuvoton's BMC Business Accelerates Growth, with Stronger Expansion Expected Next Year

Nuvoton (4919-TW) held its earnings call today (5th), where CEO Hsin-Lung Yang stated that ongoing AI infrastructure investment expansion by Cloud Service Providers (CSPs) has driven significant year-on-year growth in Nuvoton's BMC business this year. The company anticipates that growth momentum will further accelerate in 2027, clearly outpacing 2026, primarily driven by increased market share among CSP customers and expanded product coverage.

Nuvoton's revenue contribution from AI and computing applications declined from 35% in Q1 to 31% in Q2. The company clarified that this decrease was mainly due to weaker performance in PC and motherboard products, not weakening demand for BMC or server solutions.

Chairman Y.S. Su emphasized that current AI server and data center investments are primarily concentrated among CSPs. Going forward, Nuvoton's BMC business growth will be led by CSP customers rather than traditional PC clients. As Nuvoton continues to gain market share within CSP accounts and expands its platform integrations and customer reach, these two factors will become key growth drivers for BMC operations next year.

To meet the anticipated significant increase in AI and BMC demand next year, Nuvoton has recently expanded its R&D investments. Chairman Su acknowledged that increased R&D expenses in Q2 have placed short-term pressure on operating margins, but stressed that these investments are strategic preparations for next-generation AI server product requirements.

In cloud computing products, Nuvoton has developed multiple cloud computing chips, including encryption engines within its eSIO/eBMC product lines, successfully achieving international security certification for NIST cryptographic algorithms. This enables deeper penetration into CSP and data center markets with high security requirements. Nuvoton is also strengthening its post-quantum cryptography (PQC) strategy by integrating PQC technologies into its proprietary MCU platforms, creating quantum-secure MCU solutions that combine security, high performance, and low power consumption.

The company added that an increasing number of products will feature PQC specifications, with some customers already initiating early adoption. Additionally, demand related to the EU's Cyber Resilience Act (CRA) is rapidly rising, with multiple customer collaboration projects underway, expected to contribute revenue progressively from the second half of this year into next year.

Regarding smart glasses, Nuvoton is collaborating with Qualcomm (QCOM-US) and Google (GOOG-US). Google leads the overall platform architecture, Qualcomm provides the main SoC, and Nuvoton serves as a co-processor supplier, delivering key image processing SoCs for the platform.

Chairman Su emphasized that Nuvoton's technology enhances AR glasses' performance and wearing comfort. First-generation products have begun shipping, with demand primarily from the Chinese market. Specifications for the second-generation products are being jointly defined by Google, Qualcomm, and Nuvoton.