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ASE warns of sales drop owing to seasonal slowdown

Advanced Semiconductor Engineer-ing Inc (ASE, 日月光半導體), the world's largest semiconductor packaging and testing firm, yesterday warned that first-quarter revenue could drop between 12 percent and 14 percent owing to seasonal factors and weak market sentiment.

"First quarter is historically a slow season, as there are less working days. Furthermore, demand visibility is unlikely to improve before the second quarter," chief financial officer Joseph Tung (董宏恩) told an investor conference.

Despite weak market sentiment, Tung said the company remained upbeat about its growth prospects as the outsourcing trend was expected to accelerate this year, which would benefit ASE.

ASE also reported that fourth-quarter net profit expanded 35 percent to NT$3.7 billion (US$114.9 million) from NT$2.73 billion a year ago. However, quarterly profit was down 12 percent from the third quarter's NT$4.23 billion owing to rising operating expenses and higher taxes, Tung said.

"Last quarter was a good quarter for ASE, as revenues and earnings both reached an all-time high. Revenues grew 4 percent quarter-on-quarter to NT$28.98 billion last quarter, while gross and operating margins both reached historical highs of 32.3 percent and 22.9 percent respectively," Tung said.

However, the gross margin is expected to slide to 25 percent to 26 percent this quarter, he said.

ASE's guidance for the first quarter was slightly below foreign investor expectations of a 10 percent drop in revenue, an analyst with the Taipei-based Prudential Financial Securities Investment Trust Enterprise (保德信投信), who wished to remain anonymous, said yesterday.

"ASE's performance in its core business last quarter was better than expected. However, its non-core business was slightly below expectation owing to its depreciation expense," the analyst said.

ASE's stock rose 3.5 percent to NT$28.05 on the Taiwan Stock Exchange yesterday, outperforming the TAIEX's 0.3 percent drop.

ASE expects to spend US$400 million to US$450 million in capital expenditure this year -- similar to last year, Tung said.

Tung declined to give a full-year growth forecast, but said the company was confident of seeing the same quarter-on-quarter growth pattern as last year.
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