• Total Revenue: $63 million, up 24% year over year, down 5.1% sequentially.
• Gross Profit Margin: 25.2%, up 2.5 percentage points year over year, up 1.9 percentage points sequentially.
• Standard Products Revenue: $60.7 million, up 47.5% year over year, down 5.1% sequentially.
• Power Solutions (PAS) Revenue: $43.5 million, up 33.2% year over year, down 8.7% sequentially.
• MSS Revenue: $17.3 million, up 102% year over year, up 5.1% sequentially.
• Operating Loss: $15.7 million, compared to $11 million in Q3 and $15.9 million in Q4 2023.
• Adjusted Operating Loss: $7 million, compared to $9 million in Q3 and $14.1 million in Q4 last year.
• Net Loss: $16.3 million, compared to $9.6 million in Q3 and $6 million in Q4 last year.
• Adjusted EBITDA: Negative $2.6 million, compared to negative $4.9 million in Q3 and negative $10 million in Q4 last year.
• Cash Position: $138.6 million at the end of Q4.
• CapEx: $7.4 million in Q4; $11.6 million for the full year 2024.
• Q1 2025 Revenue Guidance: $42 million to $47 million, down 8.9% sequentially, up 11.5% year over year at the midpoint.
• Q1 2025 Gross Profit Margin Guidance: 18.5% to 20.5%.
• Full Year 2025 Revenue Growth Expectation: Mid- to high single-digit year over year.
• Full Year 2025 Gross Profit Margin Expectation: 19.5% to 21.5%.

• Warning! GuruFocus has detected 3 Warning Signs with MX.

Release Date: March 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MagnaChip Semiconductor Corp (NYSE:MX) announced a strategic shift to become a pure-play power company, focusing on power discrete and power IC businesses to drive profitability.
• The company plans to launch over 40 new generation power products in 2025, with 27 new products launching in Q4 2025, which are expected to drive higher revenue per wafer and improve gross margins.
• Q4 2024 revenue was $63 million, up 24% year over year, and the gross profit margin exceeded guidance, indicating strong financial performance.
• The company has a robust plan to invest $65 million to $70 million over the next three years to upgrade production equipment at their Gumi Fab, aiming for top-line growth and bottom-line improvement.
• MagnaChip Semiconductor Corp (NYSE:MX) has set clear financial targets with their 3-3-3 strategy, aiming for $300 million annual revenue with a 30% gross margin within three years.

Negative Points

• The company is exploring strategic options for its display business, which will be classified as discontinued operations, indicating potential challenges in this segment.
• Q4 2024 saw an operating loss of $15.7 million, and the company recorded a net loss of $16.3 million, reflecting ongoing financial challenges.
• The wind down of Transitional Foundry Services is impacting fab utilization, contributing to a lower gross profit margin outlook for 2025.
• MagnaChip Semiconductor Corp (NYSE:MX) faces underutilization issues at its Gumi Fab due to the phaseout of Transitional Foundry Services, affecting profitability.
• The company anticipates a sequential decline in Q1 2025 revenue due to seasonality and the wind down of Transitional Foundry Services, indicating short-term revenue challenges.

Q & A Highlights

Q: Which end markets are expected to drive mid-high single-digit year-over-year growth in 2025 for the power segment? A: Young-Joon Kim, CEO, stated that growth in 2025 is expected to be evenly distributed across consumer, communication, and computing markets. The launch of 27 new products is anticipated to boost growth in AI computing, industrial, and automotive sectors.

Q: What are the drivers for gross margin improvement in the near term for the power business? A: Shinyoung Park, CFO, explained that the near-term gross margin will be impacted by the wind-down of Transitional Foundry Services, affecting utilization. However, new power generation products starting production in the second half of 2025 and increased contribution from these products in 2026 are expected to improve margins.

Q: How will the cash balance be utilized, and are there plans for buybacks or inorganic activities? A: Young-Joon Kim, CEO, mentioned that $65 million to $70 million will be invested in upgrading the Gumi facility over three years. Shinyoung Park, CFO, added that a $26.5 million credit line with favorable terms will partially fund this investment, allowing for effective cash management.

Q: What is the impact of the Gumi Fab underutilization on the 2025 gross margin guide? A: Shinyoung Park, CFO, noted that the phase-out of Transitional Foundry Services has left about 20% of the Gumi Fab idle, impacting utilization. The transition to new generation power products will take time, with benefits expected in the second half of 2025.

Q: What is the strategy for entering high-value markets like industrial AI? A: Young-Joon Kim, CEO, explained that new generation products with better performance and lower costs will enable penetration into high-value applications such as AI servers and high-end industrial markets. The goal is to achieve production by the end of the year with these products.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.