Weak controller IC demand for memory devices will drag down Solid State System's (3S) revenues in the second quarter, but gross margin for the quarter will be higher than the 32.92% reported for the first quarter, according to the company.

3S posted revenues of NT$163 million (US$5 million) in the first quarter of 2016, up 40.4% sequentially. The company credited the positive performance to rising shipments of NAND flash controller ICs and MEMS microphone chips.

3S' gross margin for first-quarter 2016 came to 32.92%, compared with 30.77% in the prior quarter and 38.24% a year earlier.

3S remained unprofitable in the first quarter with net losses of NT$21.32 million. EPS was negative NT$0.26 compared with negative NT$0.42 in the fourth quarter of 2015 and negative NT$0.27 in first-quarter 2015.

Memory device controller chips continue to be 3S' biggest revenue contributor accounting for more than 80% of the company's total revenues.