Thu, Aug 01, 2013 - Page 13 News List

SPIL back in the black on high handset demand

SPILLOVER EFFECT:The chip packager beat experts’ estimates as its Q2 gross margin climbed to a three-year high, driven by strong demand for chips in China

By Lisa Wang  /  Staff reporter

Siliconware Precision Industries Co (SPIL, 矽品精密), the world’s second-largest chip packager, yesterday said it swung back to profit last quarter thanks to strong demand for Taiwanese and Chinese low-end handsets.

SPIL’s net income grew 11.54 percent to NT$1.74 billion (US$57.9 million) in the April-to-June quarter, compared with NT$1.56 billion in the same period last year. It lost NT$292 million in the first quarter due to a lawsuit settlement.

The second-quarter profit was “better than expected,” Daiwa Capital Markets analyst Eric Chen (陳慧明) said in a research note released yesterday.

On Monday, Chen upgraded his rating on SPIL shares to “outperform” from “hold.”

The company’s gross margin rose to a three-year high of 20.9 percent last quarter, beating Chen’s forecast of 18.9 percent. The figure was an improvement from the first quarter’s 14.6 percent and the previous year’s 19.2 percent.

SPIL chairman Bough Lin (林文伯) told an investors’ conference yesterday that the company aims to maintain its gross margin at 20 percent in the current quarter.

As the firm’s major customers are building inventory to prepare for new product launches, “demand is still on the rise” this quarter, Lin said.

He declined to give a detailed quarterly forecast, but said that SPIL’s utilization rates would remain at a high range of between 78 percent and 94 percent, compared with between 80 percent and 98 percent in the preceding quarter.

Capacity will grow by between 4 percent and 17 percent after a new plant in Changhua County began operating last quarter, Lin said.

“That implies that revenue will grow from 5 percent to 9 percent this quarter compared with NT$17.6 billion last quarter, which is below ours and the market’s expectations,” Chen said in the note.

Chen originally expected SPIL’s revenue to grow by 12 percent, supported by strong demand for gaming consoles and smartphones.

Lin said he expected strong demand for low-range smartphones and tablets — primarily from China — to boost demand for chips, which would in turn increase chip packaging and testing services demand.

As global chip packagers and testers have lagged behind chipmakers in high-end chip packaging and testing capacities, Lin forecast that there would be supply constraints in the second half.

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