Thu, Dec 04, 2008 - Page 12 News List

Siliconware slashes sales forecast as orders decrease

FOLLOW SUIT The firm’s decision came on the heels of ASE’s announcement on Tuesday that it would reduce its sales estimate for the fourth quarter

By Lisa Wang and Kevin Chen  /  STAFF REPORTERS

Siliconware Precision Industries Co (矽品), the world’s second-biggest chip packager, yesterday slashed its sales outlook for the current quarter, echoing a move by its larger rival a day earlier because of decreased orders amid the deteriorating global economy.

In a stock exchange filing, Siliconware said its revenue could drop 25 percent to 28 percent in the October-December quarter, from NT$17.24 billion (US$13.1 million) the previous quarter.

On Oct. 29, company chairman Lin Wen-po (林文伯) said via Webcast that he expected a quarterly decline of between 8 percent and 13 percent in the fourth quarter.

Yesterday’s filing said that the firm’s operating margin could fall to between 7 percent and 9 percent in this quarter from 18 percent in the July-September period.

On Oct. 29, Siliconware said it expected operating margin to drop by between 14 percent and 16 percent in the fourth quarter from the third-quarter.

The Taichung-based chip company yesterday also posted NT$4.23 billion in sales last month, a 28.3 percent drop from a year earlier and a 24 percent decline from NT$5.57 billion in October.

Siliconware’s sales outlook adjustment came after Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) announced on Tuesday that it would lower its sales estimate for the fourth quarter by between 25 percent and 28 percent quarter-on-quarter, compared to its previous forecast of a decline of between 15 percent and 20 percent.

ASE, the world’s biggest computer chip packager, also cut its gross margin forecast to between 14 percent and 15 percent from its earlier estimate of 20 percent.

In response to ASE’s downward adjustment, BNP Paribas yesterday downgraded its recommendation on the stock to “reduce” from “hold,” while Citigroup said it maintained its “sell” rating on the Kaohsiung-based firm, the two foreign brokerages said in investment notes yesterday.

BNP cuts its target price for ASE to NT$7.20, down from its previous estimate of NT$15.30, while Citigroup kept its target price at NT$8, the notes showed. Shares of ASE closed at NT$9.86 yesterday.

As order visibility remains low, the chip packagers could see further declining sales in the first two quarters of the next year, SinoPac Securities Corp (永豐金證券) said in a client note yesterday.

The local brokerage said investors should avoid ASE shares in the near term considering the bleak outlook.

While Siliconware is better than its stronger rival at cost management, SinoPac said investors should not load up on Siliconware shares until the stock’s prices drops to NT$15. Yesterday the stock closed at NT$23.05.

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