Semiconductor component distributor WPG Holdings Co (大聯大) yesterday gave an improving outlook for its margin this year as the effects of inventory correction diminish.
The company’s net income dropped 6.2 percent annually to NT$5.45 billion (US$161.21 million) last year, with sales growing 14 percent annually to NT$515.65 billion.
The results translated into earnings per share of NT$3.29, lower than the NT$3.51 recorded in 2014.
“The management team is disappointed that gross margin last year fell from 4.53 percent in 2014 to 4.16 percent,” chairman Simon Huang (黃偉祥) told an investors’ conference.
The company’s goal last year was to make net income growth outpace that of sales, Huang said.
The company said inventory turnover in the last quarter of last year improved to 37 days, down from 39 days a year earlier, and that earnings would continue to grow as inventory returns to a normal level of 30 days.
Citing research by Gartner Inc, WPG vice president Scott Lin (林春杰) said that although global semiconductor sales declined US$6 billion annually, or 1.9 percent, to US$334 billion last year, the figure is expected to recover to US$340 billion by the end of this year.
“The US$6 billion recovery in sales is to be mostly driven by growing demand for cloud-computing server solid-state hard drives and Wi-Fi and Bluetooth connectivity modules as the Internet of Things and smart home applications ecosystems see further development,” Lin said.
However, Lin said that prospects in emerging markets for smart home products, wearables and drones remain murky and are not likely to match massive demand for smartphones.
Although the demand for smartphones is slowing and average selling prices are trending down, the amount of semiconductor modules used in smartphones is to continue to grow, Lin said, citing rising adoption of fingerprint scanners in popular smartphone models as an example.
Lin said that as a distributor, the company’s expansive mix of products and markets makes it more resistant to the challenges of rising competition from China and the rapid pace of consolidation across Taiwan’s semiconductor sector last year.
While the company refused to provide guidance on operating results for this quarter due to compliance with regulations, analysts expect sales to drop between 11.71 percent and 15.92 percent sequentially to between NT$120 billion and NT$126 billion.
Gross margin might fall between 4 percent and 4.2 percent, and operating margin will likely stand at between 1.45 percent and 1.64 percent, said analysts, who asked not to be named.
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