Vanguard International Semicon-ductor Corp (世界先進) announced yesterday that its second-quarter earnings had almost doubled, thanks to recovering demand, but investors said they were concerned that the company's conservative capacity expansion plan could curb its long-term growth.
The contract chipmaker, 27 percent owned by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), posted NT$648 million (US$19.71 million), or NT$0.39 a share, in net income for the quarter that ended in June, compared with NT$373 million, or NT$0.23 per share, a year earlier.
Vanguard, which only has an 8-inch plant, said its growth momentum would carry into the current quarter because of growing demand for liquid-crystal-display (LCD) panels for computers and handsets, which would boost its factory usage to over 95 percent.
"We are seeing some upside in the driver IC for new panels used in wide-screen computers. We also found rising panel demand for low-priced handsets," Vanguard vice president Thomas Chang (張東隆) said.
Vanguard's customers have low-level inventories of such new products and demand was healthy, Chang said.
Wafer shipments would expand 20 percent at a quarterly pace in the third quarter and the average selling price would be stable, company president Hsu Chung-shi (
Chips used in flat panels accounted for more than half of the chipmaker's total second-quarter revenues of NT$2.95 billion, which represented an 8 percent increase over the same period last year.
Despite the robust outlook for the current quarter, investors had hoped the firm's new management team would be more ambitious about capacity expansion.
"We have no substantial plan to build any new factories," said former minister of finance Lin Chuan (林全), who replaced Paul Chien (簡學仁) as chairman in May.
The firm's capital spending for this year would be unchanged at NT$1.7 billion, but the chipmaker planned to boost its monthly output to 65,000 wafers by the end of this year, Lin told investors. That would be about 12 percent growth from 58,000 wafers a month in the second quarter.
"It's quite disappointing to hear that. I had hoped the new management would be more aggressive. They sound no different from their predecessors," said Roland Hsu (徐振志), who tracks the semiconductor industry for JP Morgan.
Lin said Vanguard would maintain stable ties with TSMC, whose orders make up about 30 percent of Vanguard's revenues.