AP Memory will be executing its business transformation between the fourth quarter of 2018 and first-half 2019, as the company is looking to improve its gross margin and profit performance, according to the memory-IC design house.

AP Memory will start licensing part of its memory products, while putting increased focus on its design services for AI and other high-margin devices, said the company.

AP Memory said it will lower sales of its LPDRAM products as a proportion of company revenues by licensing the product IP and working more closely with foundry chipmaker Powerchip Technology. Such moves could affect negatively AP Memory's sales performance in the short term.

AP Memory's LPDRAM chips mainly for mobile devices account for 30-40% of the company's total revenues. AP Memory previously had had Powerchip fabricate the chips, and the IC design house would do the testing before shipping them to its clients. Nevertheless, AP Memory recently has reached an agreement with Powerchip under which Powerchip will ship directly the chips to AP Memory's customers while AP Memory will grant authorization and collect only test service fees.

Meanwhile, AP Memory will move to enhance its IC design services and IPs for custom memory solutions for AI, IoT and other markets that yield higher margins. The company also disclosed it has landed US$4.5 million worth of orders for non-recurring engineering (NRE) designs from an Israel-based AI firm. The orders will start being fulfilled in the fourth quarter of 2018, AP Memory said.

AP Memory expects its gross margin to return to the 2017 level in 2019, while monthly revenues will rebound to between NT$400 million (US$13 million) and NT$500 million.

AP Memory saw its gross margin slide to 19% in the first half of 2018 from 24% a year earlier. The company reported net profits of NT$131 million on consolidated revenues of NT$2.39 billion for the six-month period, with EPS coming to NT$1.85.

By: DocMemory
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