Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world's biggest chip packager, yesterday said net income in the first quarter had dropped by 48 percent from a year earlier as demand sagged on inventory pileup.
Net income dropped to NT$1.66 billion (US$50.1 million), or NT$0.36 per share, during the quarter ended last month, from NT$3.18 billion, or NT$0.69 a share, in the same period last year, a company statement said.
By contrast, smaller rival Siliconware Precision Industries Co (SPIL, 矽品精密), based in Taichung, yesterday posted 36-percent growth in earnings for the first quarter to NT$3.83 billion, or NT$1.32 a share, from a year ago, the company said in a statement.
Looking forward, ASE expected profits to rebound gradually beginning this quarter and the growth momentum to accelerate in the second half, chief executive officer Joseph Tung (董宏思) told investors.
"Operations will improve quarter by quarter from the trough in the second quarter in terms of [gross margin]," Tung said. "Margin for 2007 may return to the peak of last year, around 30 percent."
Tung stressed that the operation of ASE would not be impacted in any way by the end of the buyout talks with private equity fund investors led by Carlyle Group earlier this month.
Revenue would expand by 10 to 12 percent this quarter from NT$21.09 billion last quarter and gross margin would bounce back to between 25 percent and 30 percent from 23.7 percent last quarter on stable price after a 3 percent quarterly drop, Tung said.
Factory usage would improve to 75 to 85 percent this quarter from 70 to 75 percent last quarter, he said.
"PC and consumer segments will grow faster than the consumer sector this quarter as demand for the Vista operating system is growing according to the forecast of our customers," Tung said.
Computer graphics processing unit and video display card maker ATI Technologies Inc -- acquired by chipmaker Advanced Micro Devices Inc last year -- and handset chipmaker Broadcom Corp are two of ASE's top 10 clients, ASE said.
In addition, customers in the communications sector should lower their inventory to a healthy level this quarter, Tung said.
This year's revenues may rise at a double-digit rate from NT$100.42 billion last year, he said.
"The first quarter earnings are much lower than our estimate. The first quarter should be the low point for ASE. We are monitoring how strong ASE's margin will recover later this year," said Kenneth Lee (李克揚), an analyst at the Primasia Securities.
Lee said he would maintain his "hold" rating on ASE until there was evidence indicating stronger growth.
This year ASE added new affiliates Power ASE Technology Inc (日月鴻科技) and Global Advanced Packaging Technology Ltd into its books.
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