Powertech Technology (力成), a memorychip tester and packager, yesterday reported a 17.5 percent decline in net income for last quarter to NT$1.05 billion (US$33.52 million), or NT$1.03 per share, due to declining revenue from its commodity DRAM segment.
With this quarter bringing a seasonal slow period, the firm expects its business to recover after the Lunar New Year holiday, Powertech president JY Hung (洪嘉鍮) told an investors’ conference.
“We foresee Powertech’s performance to grow quarter-by-quarter this year, driven mainly by the flash memory and logic IC segments,” Hung said.
Last quarter, gross margin increased 4.2 percentage points to 16.2 percent on an annual basis, but dropped 1.8 percentage points quarterly due to a decline in revenues and changes to the firm’s product portfolio, Hung said.
The DRAM segment, accounting for 26 percent of the firm’s total revenue, dragged Powertech’s performance down last quarter and the DRAM demand will remain soft this quarter, he said.
Powertech’s DRAM segment will still grow this year, Hung said, citing strong demand for DRAM for mobile devices and graphics.
The firm’s logic and flash segments accounted for 30 percent and 44 percent respectively of its total revenue last quarter, company data showed.
“We anticipate a mild slowdown in revenue this quarter due to inventory adjustments in the market, which might slightly impact gross margin and earnings per share, but we foresee extra orders to brighten forecasts week-by-week after next month,” Hung said.
In addition, demand for solid-state drive (SSD) and high-density flash products would stay strong this year, while business for the logic segment will start to grow after next month, he said.
However, the company has a conservative capital expenditure plan this year, Hung said, with the main expenses focusing on capacity expansion for flip-chip, and advanced packaging and testing.
Powertech chairman Tsai Du-kung (蔡篤恭) said that the advanced logic flip-chip segment accounts for 5 percent of the company’s monthly revenue, adding that he expects monthly sales of the segment to double by the end of this year thanks to demand from new Japanese automotive customers.
Separately, Tsai said Powertech’s new plant in Xian, China, which is run in partnership with US-based Micron Technology Inc, is to begin operations and contribute revenue in the first quarter of next year.
Tsai said Powertech initially invested US$70 million in the new plant, but might increase investment to a total of US$210 million for equipment purchases.
The Xian unit will not dilute Powertech’s gross margin or profitability, nor will it be a burden on the firm’s finances, Tsai said.
“The strategic partnership with Micron will definitely bring benefits to Powertech’s DRAM segment in the next five to eight years,” Tsai said, citing Micron’s leading position the market.
Yuanta Securities and Investment Consulting Co (元大投顧) yesterday raised Powertech’s target price from NT$67 to NT$68, citing positive outlook for the company this year.
“The management’s outlook on the flip-chip segment and the deal with Micron will serve as the key basis for the share price to move upward,” Yuanta analyst Andrew Chen (陳治宇) said in a note to clients.
Powertech shares rose 0.38 percent to NT$52.8 in Taipei trading yesterday, underperforming the TAIEX, which gained 0.46 percent.
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