Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s largest contract chip testing and packaging service provider, yesterday said sales this quarter would be weaker than it expected.
“We will still grow from the last quarter, but due to the communication segment’s end demand being weaker than expected, the growth momentum will not be as strong,” ASE chief financial officer Joseph Tung (董宏思) told an investors’ conference in Taipei.
Tung said slowing demand for communication devices in China is one of the factors dragging the growth momentum, while ASE is to write in inventory this quarter.
Citigroup Inc in March said it forecast that China’s smartphone penetration rate this year would reach 93 percent, outpacing the global average of 73 percent.
However, the market watcher said it foresees China’s smartphone shipment growth only being 12 percent.
“We think ASE’s growth momentum will pick up next quarter and its annual performance will grow from last year,” Tung said, citing its promising system-in-packaging (SiP) business.
Tung said the firm is upbeat that sales contributions from its SiP business this year, primarily for communication products, will double from last year thanks to new SiP projects contributing revenue this quarter and next quarter.
CIMB Securities Ltd on April 20 forecast ASE’s revenue for this quarter would grow 10.8 percent from NT$64.7 billion (US$2.1 billion) last quarter to NT$71.1 billion.
For this quarter, Tung said production capacity of ASE’s integrated circuit assembly test and material (ATM) business, which accounted for 59.69 percent of total revenue last quarter, will be up 2 percent, and the utilization rate should be flat or up 2 percent this quarter.
Gross margin for IC ATM business is to be flat this quarter from last quarter’s 25.9 percent, Tung said.
ASE’s electronics manufacturing service (EMS) business, which contributed 43.82 percent of total revenue last quarter, should reach a level close to the past two quarters.
The EMS business contributed NT$28.34 billion last quarter and NT$37.22 billion the previous quarter.
Tung said that sales contributions from EMS business is likely to be close 50 percent this quarter.
However, EMS gross profit margin this quarter might be slightly lower than 8 percent last quarter due to customer supply-chain issues, Tung said.
ASE reported net income of NT$4.46 billion last quarter, or NT$0.58 per share, jumping 30 percent from NT$3.45 billion in the same period last year, Tung said.
On a quarterly basis, the figure plunged 43 percent from NT$7.86 billion due to seasonal factors, Tung said, adding that the results for the first three months of this year were in line with the firm’s expectations.
Gross margin was 19 percent last quarter, up slightly from 18.9 percent a year earlier, but down 2.4 percentage points from the previous quarter’s 21.4 percent, ASE said.
ASE shares dropped 1.58 percent to NT$43.6 in Taipei trading ahead of the conference yesterday, underperforming the TAIEX, which lost 0.34 percent.
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