Advanced Semiconductor Manufacturing Inc (ASE, 日月光半導體), the world’s top chip packager, yesterday said recovering demand has helped it end two straight quarterly losses. It expected the momentum to gather pace in the current quarter driven mainly by a consumer electronics revival, strengthening the belief that the semiconductor industry is on track for an earlier-than-expected recovery.
ASE swung into net profit of NT$1.67 billion (US$50.88 million), or NT$0.32 a share, in the April-June period on restocking demand, compared with losses of NT$1.57 billion in the first quarter of this year and NT$800 million in the final quarter of last year. A year ago, the company earned NT$2.41 billion.
To cope with improving demand, ASE allocated US$200 million for capital spending this year primarily on advanced technologies, falling in the high end of the range between US$150 million and US$200 million it estimated earlier this year.
“Prices started stabilizing from June because demand is exceeding existing capacities ... We need to build more capacity later this year to meet demand because our utilization is approaching the limit,” chief financial executive Joseph Tung (董宏思) told an investor’s conference.
Prices fell betwenn 3 percent and 5 percent quarter-on-quarter during the April-June period, he said.
This quarter, shipments may grow 15 percent from last quarter, while factory utilization may rise to about 85 percent from 70 percent to 75 percent last quarter, Tung said.
As prices may hold steady this quarter, shipment growth could translate into approximately 15 percent revenue growth for ASE, from NT$20.88 billion in the second quarter.
“The growth is more than our conservative estimate of more than 10 percent increase,” said Randy Abrams, a semiconductor analyst with Credit Suisse.
ASE also beat Abrams’ estimate of NT$0.15 earnings per share.
ASE’s prospects matched the broader view that the semiconductor industry was recovering from the downturn, Abrams said, joining customer Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) surprisingly good guidance.
On Thursday, TSMC said it planned to raise capital expenditure by 53 percent to US$2.3 billion for this year and the company’s third-quarter revenue would increase by 20 percent to NT$90 billion from the second quarter.
To meet stronger-than-expected restocking demand, local rival Siliconware Precision Industries Co (SPIL, 矽品精密) is also more willing to spend on new equipment. On Wednesday it said that it may spend more than the NT$4 billion originally budgeted for this year.
This quarter, demand from consumer electronic devices would take over from communication products in leading the recuperation, while computers may show relatively weaker strength, Tung said.
Tung also gave a rough idea about the final quarter, saying it could be a flat period in terms of revenues, compared with the third quarter.
Credit Suisse reiterated its positive view on the stock and retained its rating of Outperform on ASE.
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