ASE doubles net income in Q3

Advanced Semiconductor Engineer-ing Inc (ASE, 日月光半導體), the world's biggest chip packager, yesterday said that third-quarter net income more than doubled from a year ago, but demand could taper off in the current quarter owing to inventory problems.

ASE's net income jumped to NT$4.18 billion (US$126 million), or NT$0.91 per share, in the last quarter, compared with NT$1.59 billion, or NT$0.35 a share, during the same period last year.

Quarterly, that represented a 43 percent decline from NT$73.19 billion when ASE's net income was inflated by a huge sum from a fire insurance claim.

However, revenue in the fourth quarter "will fall as overall [demand] in the industry will be softer and some of our customers are going through an inventory correction," company chief financial officer Joseph Tung (董宏思) told an investors' conference.

Revenues are expected to slide by a mid to high-single digit percentage in the current quarter from a record high of NT$26.73 billion in the third quarter, Tung said.

The utilization rate would also drop to 80 percent to 85 percent this quarter from 90 percent last quarter, according to Tung.

Tung added that gross margin would fall to around 28 percent to 29 percent from a historical high of 31 percent this quarter.

However, "[demand in] the first quarter next year may be stronger than usual," Tung said. The first three months of the year is usually a slack season.

Customers may resume orders next quarter after digesting their inventory by the end of this quarter, Tung said.

The long-delayed launch of Microsoft Corp's Vista operating system, which is now scheduled to debut in January, would likely spur demand, Tung added.

Despite ASE's upbeat forecast, Joyce Hsu (許宜君), a semiconductor analyst at Fuh Hwa Securities Investment Trust Co Ltd (復華投信), said: "We still expect a decline [in revenue and earnings], but that could be at a slower pace."

Tung also said that the firm's business may be affected by Advanced Micro Devices Inc's recent acquisition of computer chipmaker ATI Technologies Inc. ASE counts computer chipmaker ATI, mobile phone chipmaker Broadcom and Microsoft among its top 10 clients.

However, Hsu said that any reduction in orders would likely be short-lived, as the merging companies work on integrating their suppliers, which in the long run could benefit larger packagers.

Shares of ASE rose 0.33 percent to NT$30.45 on the Taiwan Stock Exchange yesterday, while those of its rival Siliconware Precision Industries Co (矽品) fell 2.49 percent to NT$41.1.