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Taiwanese Chipmaker Lowers Revenue Forecast as Cryptocurrency Mining Loses Charm

Taiwanese Chipmaker Lowers Revenue Forecast as Cryptocurrency Mining Loses Charm

Reading Time: 2 minutes by on July 4, 2018 Altcoins, Business, Finance, Mining, News, Tech

Taipei-based computing chip and motherboard manufacturer Gigabyte Technology Co., Ltd. has lowered its revenue forecast for the remaining half of 2018 citing low demand from cryptocurrency miners, Capital Investment Management Corp. stated in June 2018.

Cryptocurrency Mining Losing Sheen?

A report on Taipei Times on July 2, 2018, confirmed the company’s negative outlook for the cryptocurrency mining sector.

While 2017 saw a boost in revenue for several chipmakers, the cryptocurrency mining market is gradually losing its sheen, presumably due to low profits for miners and heightened concerns from local authorities for its tremendous electricity usage in addition to other regulatory concerns.

Gigabyte parent company Capital Investment stated in a note:

“The prices of major cryptocurrencies have plunged after peaking in early 2018 leading to persistently lower demand for cryptocurrency mining and for Gigabyte graphics card shipments, which decreased somewhat since the beginning of the second quarter.”

The lesser-known Taiwanese company received an unexpected demand for its product in 2017, registered profits of several hundred million dollars. However, Capital Investments noted that revenues are gradually decreasing since March 2018 and added: “second-quarter gross margin could underperform quarter-on-quarter.”

Gigabyte’s revenues reached about NT$5 billion ($163.9 million) in April and May 2018, compared to March 2018’s NT$8.5 billion ($261 million), a massive $100 million decrease.

Gigabyte, a Major Chip Producer

A relatively unknown company, Gigabyte exported over 1.2 million graphics cards in the first half of 2018 but expects a 20 percent decline on a month-by-month basis. As stated, a total of 350,000 GPUs were shipped in April and May 2018, compared to March’s 450,000.

Graphics cards sales accounted for 36 percent of the company’s revenue, below motherboard sales of 49 percent and above server sales of 15 percent.

However, the company hopes Nvidia’s Volta Graphic cards to bolster the mining sector due to their faster processing power. While reports suggest Nvidia’s inventory is gathering dust as mining demand has decreased, the company has not officially made announcements in this regard.

Meanwhile, Gigabyte shares fell 14.25 in June 2018 as chipmakers across the world posted a pessimistic outlook for the cryptocurrency sector, lowering investor sentiment for the companies.

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