The world’s biggest chip packager, Advanced Semiconductor Manufacturing Co (ASE, 日月光半導體), yesterday reported an 8 percent increase in net profits for the last quarter, as limited supply of advanced 28-nanometer chips affected growth, which fell short of most analysts’ expectations.
However, ASE gave a stronger-than-expected forecast for this quarter, predicting revenue growth of about 5 percent to 7 percent sequentially from last quarter’s NT$48.99 billion (US$1.67 billion), fueled by rising end demand for smartphone chips, chief financial officer Joseph Tung (董宏思) told investors.
The projection exceeded the 0.5 percent quarterly increase in revenue forecast by Credit Suisse analyst Randy Abrams and was much better than a sequential decline of 0.96 percent predicted by Bloomberg.
“ASE’s fourth quarter revenue guidance is slightly better than we thought,” Eric Chen (陳慧明), a semiconductor analyst with Daiwa Capital Markets, said in a report note issued yesterday.
“Growth drivers pretty much come from the communications sector, particularly high-end smartphones,” Tung said.
Half of ASE’s revenue in the last quarter came from the communications sector, with handset chip makers Broadcom Inc, MediaTek Inc (聯發科) and Qualcomm Inc all clients in the last quarter.
“Besides, the percentage of IDM [integrated device manufacturer] customers will increase [from the third quarter’s 31 percent],” he said.
Net profits grew to NT$3.45 billion, or NT$0.45 per share, in the quarter ending Sept. 30, compared with NT$3.2 billion, or NT$0.42 a share, in the second quarter, according to ASE’s financial statement. That was a slight decrease from net profits of NT$3.47 billion in the third quarter of last year.
The figure was below the NT$4.08 billion in net income estimated by Abrams and a consensus estimate of NT$3.8 billion by Bloomberg.
“Supply of 28nm chips grew slower than expected,” Tung said.
Shipments last quarter only grew 4 percent sequentially, hitting the low end of his forecast range of 4 percent to 6 percent.
Gross margin for its packaging and testing business is expected to be flat this quarter, compared with last quarter’s 22.8 percent, as the strength of the New Taiwan dollar against the US dollar and an uptick in gold prices would offset gross margin improvement, Tung said.
Average selling price would only drop by 1 percent or 2 percent sequentially, he said.
ASE said every NT$0.5 appreciation of the NT dollar versus the US dollar would erode gross margin by 0.25 to 0.3 percent, ASE said.
“The NT dollar is appreciating at a faster pace than we expected,” Tung said.
Every US$50 increase per ounce in the price of gold would erode its gross margin by 0.5 percent, as gold is used in packaging technology, ASE said. It expected gold prices to rise to US$1,749 per ounce this quarter, from its prediction of US$1,610 last quarter.
To prevent rising gold prices from hurting gross margins, ASE started using copper wirebonding technology in 2009, with more than half of its wirebonding services for clients utilizing such technology.
ASE plans to spend US$900 million on new equipment this year, exceeding a previous estimate of US$800 million. Next year, spending would fall significantly, Tung said.
Daiwa’s Chen gave a “buy” rating on ASE and Credit Suisse rated ASE as “out-perform,” with a target price at NT$27.2.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by