Gigabyte Technologies Co. Ltd. recently announced that the company is expecting a significant decline in revenue for its second quarter of this year. The Taipei-based motherboard and computing chip manufacturer said that the revenue drop is expected due to decline in the operations of cryptocurrency mining. The negative outlook of the leading supplier of motherboards components and graphic cards that are used in the mining of cryptocurrency has surprised many trade analysts.
Crypto mining loses luster
The cryptocurrency mining skyrocketed in 2017 giving a major boost to the earning of most of the chipmakers. However, interest of the crypto enthusiasts in the mining has slowed down due to which the overall crypto market has lost its luster. Trade analysts believe that increase in the concerns from the local authorities for a large amount of electricity usage as well as low profits has discouraged miners. Additionally, the new regulatory concerns have also diminished the interest of the crypto enthusiasts in mining.
According to the parent company of Gigabyte, Capital Investment, “The prices of major cryptocurrencies have plunged after peaking in early 2018 leading to persistently lower demand for cryptocurrency mining and for Gigabyte graphics card shipments, which decreased somewhat since the beginning of the second quarter.”
Gigabyte to reduce average selling prices
The Taiwanese company, which skyrocketed to popularity, after the demand for its products increased unexpectedly in 2017 earned hundreds of million dollars in profit last year. However, the revenues have been found to be decreasing gradually over past few months. That is why the company thinks that the gross margin for the second quarter will not perform as expected.
The revenue of the company reached $163.9 million in April and May this year compared to $261 million in March 2018, which is $100 million less. The company is also planning to cut down its average selling prices (ASPs) by 10%. It is most likely to affect the second-quarter gross margin of Gigabyte.
Apart from the Taiwanese chipmaker, another company in the mining hardware sector, Nvidia was badly affected by the slump of this year in the crypto market. In May 2018, Nvidia declared that its sales of mining chips are expected to go down by 60% by next year.