Sat, Jul 28, 2012 - Page 13 News List

Packaging recovery lifts ASE profits by 56 percent

GLASS HALF FULL:The advanced packaging technology sector is bouncing back, with the top chip packaging firm forecasting high earnings, despite some analysts’ misgivings

By Lisa Wang  /  Staff reporter

Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s top chip packager and tester, yesterday posted 56 percent growth in profits for the previous quarter, supported by a recovery in demand for high-margin advanced packaging technologies.

Growth momentum is expected to extend into this quarter and the next on hopes that key customers in the communications sector will roll out new products on schedule after a supply constraint on 28-nanometer chips eased.

Handset chip supplier Qualcomm Inc, which is one of ASE’s top 10 customers, has complained that a short supply of 28-nanometer chips from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) capped its growth last quarter. TSMC said supply would catch up with customer demand in the next quarter.

“We are cautiously optimistic about the third quarter,” ASE chief operating officer Tien Wu (吳田玉) said, adding that the company felt positive despite uncertainties over the weak macro-economy, inventory digestion and supply chain constraints.

“At this point in time, we have very high confidence [that] we will see quarter-on-quarter growth all the way to the year’s end,” Wu said. “In the third quarter and, especially, the fourth quarter announcements, you will see a healthy jump in advanced packaging technology revenue.”

In the second quarter, ASE's consolidated revenue totaled NT$45.87 billion, which represented a rise of 6.4 percent from NT$43.1 billion in the first quarter, but 0.8 percent lower than NT$46.25 billion the year before.

Last quarter, revenue in the company's core integrated circuit assembly test and material (ATM) business grew 11.1 percent quarter-on-quarter and 0.71 percent year-on-year to NT$32.49 billion.

This quarter, shipments in the IC ATM business are expected to grow by between 4 percent and 6 percent over last quarter’s level, with the average selling price staying steady, ASE chief financial officer Joseph Tung (董宏思) said.

“We are waiting for the supply constraint on 28-nanometer chips to ease,” Tung said. “This part [of packaging services] delivers higher margins.”

ASE’s projection surpassed the expectations of some analysts, including Credit Suisse’s Abrams Randy.

Randy predicted that ASE’s revenue this quarter would grow about 5 percent quarter-on-quarter and be hit by a decline of 4 percent percent next quarter.

In the quarter ending June 30, net profits expanded to NT$3.2 billion, or NT$0.48 per share, compared with NT$2.06 billion, or NT$0.31 a share, in the prior quarter.

That was a 12.13 percent contraction from NT$3.64 billion, or NT$0.54 per share, in the same period last year.

Consolidated gross margin rose to 19.31 percent in the second quarter from 16.68 percent in the first quarter, beating the company’s original forecast, and was compared with 19.38 percent a year ago. Third-quarter margin is expected to experience little change from the second quarter’s, Tung said.

As for gross margin for the IC ATM business, Tung said the third-quarer figure would likely stay at the same level of 22.43 percent seen in the second quarter, up from 19.35 percent in the first quarter.

ASE retained its capital spending at US$800 million for this year, mostly because of its expansion of cost-efficient copper wirebonding machines.

The expansion would help boost the revenue contribution from this popular packaging technology to 60 percent at the end of this year, from 53 percent last quarter, ASE said.

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