Sat, Feb 08, 2014 - Page 13 News List

ASE reports record quarterly profits

FRESH FOCUS:Sales of electronics manufacturing services were 20% more than the company expected, while closure of its K7 plant in Greater Kaohsiung had little impact

By Helen Ku  /  Staff reporter

Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s largest chip packager, yesterday reported record-high quarterly net profits of NT$5.81 billion (US$192 million), buoyed by sales of system-in-packaging (SiP) business for fingerprint sensors used in Apple Inc’s iPhone 5S.

Last quarter’s earnings represent 31 percent growth from NT$4.43 billion in the third quarter of last year and reflects a 33 percent expansion from NT$4.37 billion during the same period a year ago, according to ASE’s latest financial report.

While several brokerages had forecast that ASE’s business would suffer a limited impact from the shutdown of its K7 plant, the Greater Kaohsiung-based company’s fourth-quarter earnings per share (EPS) of NT$0.73 turned out to be better than those of NT$0.7 and NT$0.61 estimated by Barclays Capital and Deutsche Bank respectively.

Aided by increased orders for chip packaging and testing services for mobile devices, the company’s full-year net profits also set an all-time high at NT$16.29 billion last year, with EPS of NT$2.11.

“Sales of ASE’s electronics manufacturing services [EMS], including those of SiP services, jumped 45 percent sequentially during last year’s holiday season, beating the company’s internal estimate of a 25 percent increase,” ASE chief financial official Joseph Tung (董宏思) told investors.

ASE’s EMS business outperformed the company’s integrated circuit packaging and testing businesses last quarter, mainly because ASE offered “quite a lot of” SiP services for clients’ Wi-Fi modules and fingerprint sensor products, Tung said.

While Tung declined to confirm whether Apple is on ASE’s client list due to a confidentiality agreement, analysts had said in reports that Apple’s iPhone 5S would become ASE’s sales driver from last quarter through this year.

“ASE will benefit from the market trend that more and more handset brands started adopting fingerprint sensors for their new smartphone and tablet products,” Taipei-based KGI Securities Co (凱基證券) analyst Bonny Weng (翁筱雯) said in a report released on Tuesday last week.

“Apple’s application processor orders are also likely to help boost ASE’s sales,” said Weng, who estimated that the company would post EPS of NT$0.66 for last quarter.

Due to a partial shutdown of the company’s assembly lines in Greater Kaohsiung, ASE’s core businesses — including IC packaging and assembly testing — were expected to contract 12 percent to 15 percent this quarter from last quarter, Tung said.

The forecast will bring ASE’s core business revenue to a range between NT$32.95 billion and NT$33.83 billion from NT$37.9 billion last quarter, he said.

In response to investors’ questions of when ASE’s K7 plant can resume operation after it was partially shut down last month due to illegal wastewater dumping, ASE chief operating officer Tien Wu (吳田玉) said: “We are doing everything we can to fix the [factory shutdown] issue.”

Wu said “the shutdown was a one-time incident,” adding that ASE had installed automation systems to test if wastewater to be discharged contain toxic substances.

Earlier last month, the Greater Kaohsiung government ordered ASE to partially shut down the its K7 plant in the Nanzih Export Processing Zone for violations of regulations and discharging toxic wastewater into the nearby Houjin River (後勁溪).

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