On Monday afternoon, Korean power and display chip supplier MagnaChip Semiconductor (MX) said it now expects to report Q4 revenue of $198 million to $200 million, up from $179.4 million a year ago and well above prior guidance of $181 million to $191 million. The company attributed the guidance hike to "significantly" better-than-expected demand for its OLED display driver IC business, which has racked up a number of design wins with Android OEMs.
Around the same time, Ichor (ICHR) , a provider of fluid delivery systems for (among other things) chip manufacturing equipment, said it now expects to report Q4 revenue of $189 million. That represents 22% annual growth, and is near the high end of a prior guidance range of $180 million to $190 million.
Perhaps more importantly, Ichor also guided for Q1 revenue of $210 million to $230 million. That represents 60% annual growth at the midpoint and is well above a prior consensus of $194.1 million.
Ichor's stock rose 29% on the news to new all-time highs. MagnaChip's stock rose 11%, reaching the highest levels seen since early 2015, when an accounting scandal led shares to plunge.
Some of the Q4 strength seen by MagnaChip's OLED display driver business likely has to do with the company's design win momentum and growing OLED penetration rates within the smartphone market. However, given that MagnaChip's OLED driver client list includes Samsung and major Chinese Android OEMs, there could be some positive read-through for mobile chip suppliers such as Qualcomm (QCOM) , Skyworks (SWKS) and Qorvo (QRVO) -- particularly since it comes on the heels of favorable pre-announcements from Himax and Silicon Motion, two other firms with meaningful smartphone exposure.
And naturally, higher OLED penetration rates are a positive for OLED materials and IP-licensing firm Universal Display (OLED) .
Meanwhile, Ichor's pre-announcement and Q1 guidance acts as one more sign that 2020 will be a pretty good year for chip equipment makers such as Applied Materials (AMAT) , Lam Research (LRCX) and KLA (KLAC) . As it is, Intel (INTC) and Taiwan Semiconductor (TSM) , two of the chip equipment industry's big-3 clients (along with Samsung), have both signaled that they'll be spending heavily on capex in 2020.
And while memory capex remains depressed following major 2019 DRAM and NAND flash memory price declines, spending could improve some over the course of 2020, given that NAND prices have been rebounding in recent months and DRAM prices are now showing signs of stabilizing.
Given the enormous gains that so many chip developers and equipment makers (including many of the aforementioned names) have already posted over the last 12 months, MagnaChip and Ichor's pre-announcements aren't necessarily reasons to place fresh buy orders. But they do provide additional reasons to think that (on the whole) chip companies will be sharing more good news than bad this earnings season.