Vanguard International Semiconductor Corp (世界先進), which commands a 30 percent share of the world’s controller chips for LCD panels, yesterday reported a quarterly decline in profit last quarter on lower margins.
Net profits dropped 13.5 percent to NT$1.31 billion (US$41.63 million) last quarter from NT$1.52 billion in the second quarter, Vanguard said.
The company said it booked a non-operating loss of NT$19 million in the quarter, mostly from foreign-exchange losses.
Earnings per share fell from NT$0.92 to NT$0.8 last quarter.
Gross margin shrank from 34.8 percent in the second quarter to 34.4 percent last quarter, Vanguard said.
A strong New Taiwan dollar, which appreciated 2.47 percent against the US currency last quarter from the previous quarter, eroded 1.23 percentage points from the gross margin in the quarter, the company said.
The Hsinchu-based company expects the downtrend to extend into this quarter, given a still-improving NT dollar.
Vanguard said it expects the local currency to appreciate 1.4 percent to NT$31.5 against the US dollar this quarter, which would cut the company’s gross margin by 0.7 percentage points.
However, Vanguard said it expects better-than-seasonal customer demand this quarter.
“We are seeing wafer demand rise slightly in the fourth quarter. We have two months of order visibility,” Chairman Leuh Fang (方略) said.
Demand for driver integrated circuits used in TVs and handset panels are increasing, Fang said. Demand for power management integrated circuits used for industrial computers and automobiles is also increasing, he added.
Driver integrated circuits and power management integrated circuits are the two largest revenue sources for Vanguard.
Revenues are expected to be from NT$6.35 billion to NT$6.65 billion this quarter, little changed from NT$6.56 billion last quarter, Fang said.
Budget for capital expenditures this year is likely to drop to NT$1.6 billion from a previous estimate of NT$1.8 billion due to slower-than-expected customer demand for certain technologies and lower equipment costs, Vanguard said.
The capital spending would help boost wafer capacity by 6 percent this year from last year, the company said.
Next year, capital spending is to be about NT$1.8 billion, it said.
Separately, Fang said Vanguard is benefiting from recent mergers and acquisitions in the global semiconductor industry.
The company is seeing a gradual increase in orders mostly from power management integrated circuits, as companies aim to cut costs by outsourcing more production after completing merger and acquisition deals, he said.
Vanguard shares were unchanged at NT$64.7 yesterday. The company is 28 percent owned by Taiwan Semiconductor Manufacturing Co (台積電).
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