Thu, Jul 28, 2011 - Page 11 News List

Siliconware Q2 net income declines

By Kevin Chen  /  Staff Reporter

Chip tester and packager Siliconware Precision Industries Co (SPIL, 矽品) yesterday posted a 25.5 percent decline in net income in the second quarter from a year ago to NT$1.13 billion (US$39.1 million), 5.14 percent higher than the previous quarter.

With 3.12 billion issued shares, diluted earnings per share were NT$0.36 in the second quarter, compared with NT$0.34 in the previous quarter and NT$0.49 a year earlier, the company said in its latest earnings report.

SPIL, the world’s second-largest chip-packaging and testing company, said its gross margin of 15.6 percent in the second quarter was higher than the 15.2 percent recorded in the first quarter thanks to the company’s increased use of copper for wirebonding.

However, because of a rising NT dollar and still climbing gold prices, the figure was still lower than the 16.9 percent reported in the same period last year, the company said in the report.

Despite market concerns about inventory adjustment in the semiconductor sector in the second quarter, SPIL is expecting the adjustment to continue into the third quarter, but at a milder pace, chairman Bough Lin (林文伯) told investors.

Lin said the semiconductor sector is likely to hit the bottom next month and start rebounding in September, attributing his optimism to recent strong earnings reports from major US tech companies such as Intel Corp.

In a conference call with analysts last night, Lin said he expected the firm’s revenue to grow by between 2 percent and 6 percent in the third quarter from the second quarter, while gross margin would continue rising quarter-on-quarter slightly because of increased momentum in copper wirebonding migration from gold wirebonding.

Copper wirebonding sales grew 30.7 percent quarter-on-quarter to NT$2.81 billion in the April-to-June period, company data showed.

“In the second quarter, copper wirebonding sales reached 27.4 percent of total wirebonding revenue. It was lower than our original target of 30 percent because some US customers are reluctant to migrate to copper wirebonding,” Lin said.

Lin said he expected the rate to increase continuously on back of the still-rising gold prices.

However, the rate would not hit the 50 percent level until the second quarter of next year, rather than the company’s original target of sometime before the end of this year, he added.

"SPIL’s third-quarter revenue guidance of up 2-to-6 percent is largely in line with expectations, in view of declining PC/NB demand and slightly rising demands from communication and consumer segments," Citigroup Global Markets analyst Roland Shu (徐振志) commented in a note late last night.

"However, the [third-quarter] gross margin guidance of larger than 15.6 pecent [in the second quarter], though no specific range, is a bit conservative compared to [market] consensus of 18 percent and our forecast of 19 percent," he added.

The Taichung-based SPIL said yesterday the company's utilization rate would be 95 percent for wirebonding packaging in the third quarter, up from 90 percent in the second quarter.

The utilization rate of flip-chip ball-grid-array packaging is likely to stay flat at 95 percent in the third quarter, so is that of IC logic testing equipment at 70 percent, according to the company.

Capital expenditure, meanwhile, will be maintained at NT$10 billion for the year, Lin said.

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