Alchip faces sharp 2025 decline; analysts forecast strong 2026 recovery

Alchip Technologies Ltd. (TWSE: 3661), the Taiwan-based application-specific integrated circuit (ASIC) designer focused on high-performance server chips, is bracing for a sharp revenue contraction in fiscal 2025 as momentum behind its 5-nanometre (nm) AI processors fades. Projections for fiscal 2026, however, signal a strong rebound.

The company’s 5nm platform had been positioned as the company’s next growth engine, replacing its ageing 7nm AI accelerator as that product cycle winds down this year. However, demand has softened markedly in 2025. Analysts expect fourth-quarter revenue from 5nm and more advanced nodes to fall 48.5% year-on-year to NT$3 billion. For the full year, sales from 5nm and below are forecast to rise 32% to NT$15.4 billion, a deceleration from the 342% surge recorded in 2024.

Meanwhile, revenue from the legacy 7nm line continues to contract sharply. Fourth-quarter sales are projected to drop 56.3% to NT$2.9 billion, with full-year revenue expected to fall 51.9% to NT$15.6 billion as customers transition or pause next-generation deployments.

Combined, weaker 5nm growth and the steep decline in 7nm shipments are set to drag total fourth-quarter revenue down 54.6% year-on-year to NT$5.9 billion. Full-year revenue is projected to decline 38.1% to NT$32.2 billion, underscoring the severity of the downcycle.

2026, however, is a different story. While revenue from 7nm and older nodes is expected to continue declining, sales from 5nm and below are forecast to surge 258% year-on-year to NT$55.2 billion. That rebound is projected to drive total revenue up 137% to NT$76.2 billion, restoring the group’s growth trajectory.

Alchip reports fourth-quarter fiscal 2025 earnings on Friday, March 6. Shares of the company have been up 2.4% since March 2025 but down 14.2% year-to-date.

 This article was published by Visible Alpha, part of S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.