Tue, Aug 06, 2013 - Page 13 News List

Vanguard expects slight growth in margins and ASP

By Crystal Hsu  /  Staff reporter

Chipmaker Vanguard International Semiconductor Corp (世界先進) yesterday said it expects wafer shipments to hold steady in the current quarter from last quarter, with profit margins and average selling prices (ASP) rising slightly on the back of healthy demand.

“We expect wafer shipments to be flat in the third quarter, with the fab utilization rate hitting 100 percent” based on an order visibility of two months, Vanguard president Fang Leuh (方略) told an investors’ conference in Taipei.

Gross profit margin may hover at about 33 to 35 percent, slightly better than 33 percent in the second quarter, while the blended average selling price may rise by 3 to 4 percent, compared with a 2 percent decline last quarter, Fang said.

Demand for power management ICs used in tablets should remain strong this quarter, while chips used in computers are also seeing an uptrend, Fang said.

Consequently, power management ICs’ revenue contribution may grow this quarter, from 24 percent last quarter, he said.

Fang refused to comment on the business outlook in the fourth quarter after TSMC, which owns 39 percent of Vanguard and accounts for 30 percent of its revenue, last month projected a seasonal decline.

Andrew Lu (陸行之), a senior technology analyst at Barclays Capital, said on the sidelines of the conference that Taiwanese chip manufacturers would likely see a business correction of 10 to 20 percent next quarter from this quarter because of seasonality.

Fang said Vanguard would try its best to minimize the impact of seasonality as the company did in the final quarter of last year, when robust demand for mobile devices boosted chip sales. He did not elaborate.

The company also reported final results for last quarter, with net income reaching NT$1.14 billion (US$37.89 million), up 21 percent from the first quarter and 17 percent from a year ago. That translates into earnings per share (EPS) of NT$0.71.

Cumulative earnings in the first six months of the year amounted to NT$2.02 billion, or EPS of NT$1.26, more than double the figure from a year ago.

Lu said the results were in line with market expectations.

Credit Suisse semiconductor analyst Randy Abrams said he was neutral about Vanguard’s business prospects, adding that power management ICs were likely to fare well, but its other products might prove to be lackluster.

Credit Suisse maintained its target price for Vanguard at NT$34.

Vanguard shares closed down 1.77 percent at NT$30.45, underperforming the TAIEX, which rose 0.41 percent, Taiwan Stock Exchange data showed.

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