Sat, Aug 04, 2007 - Page 12 News List

ASE profits shrink in second quarter

BRIGHT FUTURE ASE chief financial executive Joseph Tung said the firm's customers were regaining market share and expected the growth to carry into the current quarter


The world's biggest silicon chip packager, Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), yesterday reported an approximate 8 percent drop in operating profits for the last quarter because of lower market prices, but the company expects a robust recovery in the current quarter on improving demand across the board.

Operating profits slid to NT$3.89 billion (US$118 million) during the April to June quarter, compared with NT$4.22 billion a year earlier.

Net income plunged 65 percent to NT$2.58 billion, or NT$0.52 per share, from NT$7.32 billion, or NT$1.58 per share, caused in part by NT$3.2 billion revenues in fire claims, which were included in the results for the same period last year.

"Growth momentum will be strong in the second half," ASE chief financial executive Joseph Tung (董宏思) told a quarterly investor's conference yesterday. "Based on our customers' business outlooks, growth for each of the three business sectors -- computer, communications and consumer -- will be 10 percent sequentially," Tung said.

Supported by reviving demand, revenues would expand 15 percent from NT$23.36 billion last quarter and prices would hold steady, a slightly better projection than smaller rival Siliconware Precision Industries Co's (SPIL, 矽品精密) forecast of a 10 percent to 15 percent increase.

Tung said most of the company's customers were regaining market share lost to competitors in the first quarter and expected the growth to carry into this quarter.

Handset chipmakers Broadcom Corp and Freescale Semiconductor Inc are two of ASE's top five customers.

For the full year ASE has cut its revenue growth prediction to a "slight" annual expansion from its earlier estimate of a double-digit percentage increase, due to the slower-than-expected recovery, Tung said.

"ASE's second quarter is in line with my forecast. I prefer ASE because it still has room to make progress, while we are starting to wonder how long SPIL can sustain its starry growth," said Frank Wang (王安亞), a semiconductor analyst with Morgan Stanley.

Gross margins would improve to 29 percent in the third quarter and may hit an historical high of 30 percent in the fourth quarter, compared to 27.4 percent in the second quarter, Tung told investors.

He attributed rising margins to an increased utilization rate, which will be at approximately 90 percent next quarter, up from 80 percent to 85 percent previously, and also improving efficiency at a new Chinese unit, Global Advanced Packaging Technology Ltd (威宇科技).

ASE said it would keep this year's predicted capital spending unchanged at US$400 million.

Shares of ASE jumped 5.39 percent to NT$44 and SPIL shares rallied almost to the 7 percent daily limit at NT$66.90 yesterday, outperforming the benchmark TAIEX index's 1.18 percent gain.

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