[Click eStock] "Semiconductor Design Company Gaonchips, Earnings Recognition Delayed... Target Price Down"

On the 23rd, KB Securities lowered the target price of Gaonchips, a system semiconductor design specialist company, by 20% from the previous level to 80,000 KRW. This reflects an assessment that the order momentum related to artificial intelligence (AI) semiconductor design has weakened.

Gaonchips and DeepX System Collaborate on Mass Production of System Semiconductors

Gaonchips recorded sales of 41.2 billion KRW and an operating loss of 500 million KRW in the first half of this year. Compared to the same period last year, sales increased by 52.5%, while profits decreased by 165.7%.

KB Securities analyst Kwon Tae-woo commented on the performance, saying, "The recognition of results was delayed due to adjustments in the contract schedule for projects in the first half. The contract schedule was likely somewhat delayed as functions were added and semiconductor chip sizes were adjusted to improve the mass production of AI accelerators for the Japanese market and existing order projects."

He also analyzed, "Costs increased due to license renewals and server infrastructure purchases to expand orders and advance technology verification. The delay in revenue recognition and increased costs led to a deterioration in profitability."

Analyst Kwon forecasted, "From the third quarter, delayed projects will be reflected in sales, improving performance. In the second half of the year, sales and operating profit are expected to reach 57.6 billion KRW and 7.6 billion KRW, respectively, representing increases of 57.5% and 116.6% compared to the same period last year."

He also presented a positive outlook for future business. He stated, "Recently, a contract was signed with DeepX for the design, development, and prototype supply of application-specific integrated circuits (ASIC) worth 7 billion KRW. This involved producing prototypes using Samsung Foundry's 5, 14, and 28-nanometer processes through the MPW (Multi Project Wafer) method."

He added, "This indicates that demand for semiconductor design houses continues to increase due to complex verification environments and advanced technical requirements."

This content was produced with the assistance of AI translation services.