Market forecasts for weak semiconductor earnings in the third quarter of 2019 have so far not fully materialized, which is perhaps a good sign for the semiconductor industry. Intel posted record Q3 revenue when it announced earnings Thursday. Several other companies that reported financial results acknowledged that challenges such as the ongoing trade issue with China impacted earnings signs, but pointed to areas of growing market demand that are offsetting weaknesses in other sectors.
Microcontroller supplier Cypress Semiconductor generated sales of $574.5 million in its 2019 third fiscal quarter ended September 29. Sales rose 7.9% sequentially from the second quarter though were down 8.8% year-over-year after adjusting for the divestiture of the company’s NAND business. GAAP net earnings were $12.7 million or 3 cents per share, compared to a net loss of $12.7 million in the previous quarter and net earnings of $50.7 million in the year-ago quarter.
“Cypress had a solid third quarter with strong demand in our MCD division, where revenue was up 16% sequentially driven by IoT growth, particularly in our wireless, USB-C, and PSoC product families," said Hassane El-Khoury, Cypress’ president and chief executive, in a statement. "Our Cypress 3.0 strategy remains on track as we deliver consistently strong operating margins, even in a soft market environment."
Recently, the European Commission cleared the proposed acquisition of Cypress by Infineon Technologies AG without any conditions. In June, Infineon agreed to acquire Cypress for $23.85 per share in cash.
Power Integrations, a supplier of power ICs, also fared well. In its third 2019 fiscal quarter ended September 30, the company reported sales of $114.2 million, up 11% from the prior quarter and up 4% from the third quarter of 2018. Net income was $17.1 million or 57 cents per diluted share, compared to 37 cents per share in the prior quarter and 59 cents per share in the third quarter of 2018.
Balu Balakrishnan, president and CEO of Power Integrations, said in a statement, “We returned to year-over-year revenue growth in the third quarter driven by strength in our communications category, reflecting accelerated adoption of fast chargers for smartphones. Our InnoSwitch ICs, including our new higher-power devices with GaN switches, are winning in the market thanks to their industry-leading combination of efficiency and integration. Looking ahead, while trade issues and weaker macroeconomic conditions continue to weigh on demand, we expect strong year-over-year growth in the fourth quarter."
The results were not as good for Max Linear, which supplies analog and mixed-signal ICs for the connected home, multi-market, and industrial applications. The company reported sales of $80 million, down 3% sequentially and 6% year-over-year. GAP diluted loss per share was $0.07, compared to a diluted loss per share of $0.03 in the prior quarter, and $0.20 in the year-ago quarter. The results met the company’s guidance.
“In the third quarter, revenue results were in line with our guidance, gross margin remained solid, and operating expenses declined on disciplined execution. We also generated more than $21 million in cash from operations. We are focused on delivering our new 5G wireless radio and fiber-optic datacenter high-speed interconnect products as we expand into new large, high-growth infrastructure markets,” said Kishore Seendripu, Ph.D., Chairman and CEO, in a statement.