Friday O2Micro (NASDAQ:OIIM) announced another quarterly revenue record at $23.2 million and expects to beat that number again in Q2. For Q2 2021, O2Micro expects revenues between $23.2 million and $25.1 million or a midpoint of $24.2 million, which would be growth of 40% year over year. Usually Q1 revenues decline from Q4 due to seasonality in TVs, but this year growth in battery-powered devices made up for the typical dip in TV sales.
Looking at the last four quarters and the approximate split, revenues break out:
So for three quarters in a row, Industrial, which we assume is battery management, is bigger than Consumer, which is primarily TVs. This quarter Industrial grew about 86% and even consumer grew 23%. Both sectors typically see a seasonal drop in Q1, but industrial not only did not drop off a typical 13%, it grew 13% sequentially. In addition this high growth segment was about 61% of total sales, proving revenue acceleration growth potential.
This year supply chain issues external to O2Micro will gate revenues. While it has delivered to its customers as promised, customers are increasingly not being able to source other components needed to build their products. So in 2021 this problem will weigh on O2Micro’s sales, not demand or their ability to supply. O2Micro cited Ford as an example of the phenomena---having to reduce the build of cars 50% in Q2 from lack of semiconductor components.
Battery management is the star this year as shown by 86% growth year over year in Q1. The company is growing with the market as well as moving up the chain to larger battery powered devices with larger cell count and higher content battery management going forward. The more power the device needs the more important it is to get the most out of the batteries as well as recharge them faster and more safely. The company is having great success with vacuums and ebikes and is working to develop solutions for e-vehicles that require more complicated algorithms to support many more cells and multiple battery packs that all need to communicate.
Longer term we are excited about the company position in the newest upcoming technology for TV, which is mini LEDs. Although this is currently a very expensive technology and only being deployed for high-end notebooks, it is expected to move up the size chain starting with HDR monitors for gaming where its features are most appreciated then to high-end TVs. However this technology is the future and ultimately all monitors and TVs will be built using them. O2Micro is the leader in this and is currently working with the Japanese and Korean pioneers on designs. It is working on patenting its technology in this area. Given its leading edge technology the company believes it will pick up market share as this transition occurs.
Mini LED are 1% the size of a of conventional LED package. It means a designer can fit 100 of them in the same space and achieve much higher resolution with a much higher contrast ratio. So the monitor is not going to have a single driver, but one driver IC combined with a lot of the driving capability which increases the packaging, the size and the content meaning O2Micro can sell much more product. The smaller size will also demand an integrated MOSFET where O2Micro can provide. Multi-scan technology will also be deployed to reduce motion-blur. Currently most LCD monitors refresh pixels top to bottom. Multi–scan methodology can do up to 32 scans instead of just the one scan, reducing motion blur and halo effect. This technology is also just starting to be used in professional monitors and will eventually find its way into TVs and increase O2Micro’s ASPs.
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