GaAs foundry Win Semiconductors expects to post a revenue increase of 1-3% sequentially in the fourth quarter of 2020, with gross margin ranging from 37% to 39%.

Win Semi saw its third-quarter revenue increase 9% sequentially to NT$6.57 billion (US$229.6 million), which came above the company's growth estimate of about 5%. Gross margin stayed high at 43.4%, thanks to a favorable product mix, while operating margin slipped 0.9pp on quarter to 32.7%.

Win Semi generated net profits of NT$1.97 billion in the third quarter of 2020, up 19% sequentially and 20% on year to reach a record high. EPS for the quarter came to NT$4.68.

Win Semi's EPS for the first three quarters of this year arrived at NT$12.38, already outpacing EPS for all of 2019, while revenue climbed 29% on year to NT$18.7 billion.

Win Semi expects gross margin to drop below 40% in the fourth quarter, due to falling sales of its high-margin product segment. Revenue generated from the telecom infrastructure sector will decline in the fourth quarter, whereas that from orders for cellular and handset related applications will increase, said company CEO Kyle Chen.

Win Semi has reportedly cut into the supply chain for the new iPhone 12 Pro by fabricating VCSEL chips for ToF-based LiDAR scanner.

"We believe as 5G networks become more mature in the next few years, the increase in 5G smartphone penetration will further drive the demand for 5G PA," Chen indicated. "Meanwhile, as global leading smartphone players introduce 3D sensing technology for AR applications following the facial recognition application, it is expected to drive another wave of adoption."

The compound semiconductor market outlook in the long term is promising, Chen said. Chen also disclosed that Win Semi has received approval from Taiwan's Ministry of Science and Technology for a new plant project. The company will soon kick off the new fab construction at the Southern Taiwan Science Park (STSP) in Kaohsiung, according to Chen.

Win Semi built an additional 5,000 wafers monthly at the end of the third quarter, Chen also revealed. The company's total production capacity has come to 41,000 wafers monthly, which it claims is the world's largest production capacity in the GaAs industry.