Sat, Apr 27, 2013 - Page 13 News List

ASE’s profit beats expectations

GUIDANCE:The chip packager was optimistic about second-quarter prospects, while analysts were cautious after a major client, Qualcomm, lowered its shipment estimates

By Lisa Wang  /  Staff reporter

Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s biggest chip packager, yesterday reported a better-than-expected first-quarter net profit as customers’ inventory digestion ended earlier than expected.

While net profit fell 49 percent to NT$2.23 billion (US$75.07 million) last quarter, from NT$4.37 billion in the fourth quarter last year, it was up 8.79 percent from NT$2.06 billion in the same period last year.

The figure is also better than the NT$1.78 billion estimated by Credit Suisse analyst Randy Abrams.

“Revenue only dropped 10 percent sequentially in the first quarter, which is better than our estimate of a decline of 10 to 13 percent. Customers completed their inventory digestion in January or February,” ASE chief financial official Joseph Tung (董宏思) told investors.

For this quarter, ASE expects its packaging and testing business to grow between 11 percent and 14 percent from last quarter, Tung said.

Average selling price would be stable this quarter, Tung said, indicating that revenue would grow at a similar pace as that of shipments.

Growth in the communications segment, primarily smartphone clients, would outpace that of computing and consumer sectors, Tung said.

ASE generated more than half of its revenue of NT$31.32 billion from the communications segment last quarter.

ASE’s guidance generated a lot of discussion at the investor conference yesterday as the growth figure was higher than the estimates of most analysts, including Abrams, after Qualcomm Inc, one of ASE’s major clients, projected a 6 percent sequential decline in shipments this quarter.

Abrams expected ASE’s revenue to grow about 12 percent sequentially in the current quarter. He has an “outperform” rating on ASE, with a price target of NT$27.20.

“Our forecast is based on what we’ve heard from our customers,” Tung said.

He attributed the bigger-than-expected growth to customer diversification and market share gains.

Gross margin for chip packaging and testing services, which dipped to 19.9 percent last quarter, is expected to recover and surpass the 23.2 percent recorded in the fourth quarter last year, boosted by a favorable foreign exchange rate, a potential decline in gold prices and lower depreciation expense, Tung said.

The company expects the price of gold to slide about 11 percent to US$1,520 per ounce, from US$1,673 per ounce last quarter. Every US$50 decline in the gold price would boost ASE’s gross margin by as much as 0.15 percentage points, Tung said.

Factory utilization for its advanced packaging service, mostly for smartphone chips, would rise to 85 percent this quarter from 79 percent last quarter, while the utilization rate for its testing equipment would increase to above 80 percent from 75 percent, he added.

ASE yesterday retained its projected capital spending for this year at between US$600 million and US$700 million.

Shares of ASE dipped 1.15 percent to NT$25.85 yesterday, while the stock price of local rival Siliconware Precision Industries Co (矽品精密) jumped 3.07 percent.

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