Advanced Semiconductor Engi-neering Inc (日月光半導體), the second-biggest chip packager, reported a second-quarter loss almost twice as big as analysts forecast, as falling sales of computers and cellular phones cut demand for semiconductors.
Loss in the three months ending June 30 was NT$618 million (US$18 million), or NT$0.22 a share, compared with a profit of NT$1.46 billion, or NT$0.55, in the year-ago period. The loss exceeded the average NT$356 million forecast of four analysts surveyed by Bloomberg News.
"We're very close, but we haven't reached the bottom of the semiconductor downturn yet," said Fang Kuo-li, who manages about NT$1 billion in Taiwan stocks at First Global Investment Trust Co.
The loss was ASE's first since 1998 after competition and waning demand for computer and communications chips drove down prices. Motorola Inc is among ASE's largest customers.
Second-quarter sales of NT$8.5 billion fell 32 percent from NT$12.4 billion a year ago. ASE said depreciation expenses rose to 30 percent of sales, from 15.1 percent a year ago, because the company expanded its production lines even as it used lower capacity amid declining orders.
Capacity use was below 50 percent in the second quarter and should stay at that level in the third quarter, the company said.
"The main pressure will be on pricing," said Chief Financial Officer Joseph H.S. Tung.
The company predicted its operating loss margin in the third quarter would exceed 10 percent as sales fell up to a tenth from the previous quarter. The capital expenditure budget for the year will remain unchanged at US$200 million, ASE said.
"We should start to see a gradual recovery starting in the fourth quarter," said ASE Chairman Jason Chang (張虔生), in a statement.
"Customer orders are starting to stabilize." ASE cuts chips from silicon wafers, attaches electrical wiring and packages the assembly in plastic to insulate electronic circuitry on the semiconductor.
The company recently won orders to package computer processors from Transmeta Corp and Via Technologies Inc (威盛電子), ASE said.
Shares in ASE rose the maximum 7 percent to NT$18.6 before the results were announced.
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