Wed, Nov 08, 2017 - Page 12 News List

Vanguard growth continues on demand for controller, power management chips

By Lisa Wang  /  Staff reporter

Vanguard International Semiconductor Corp (世界先進) yesterday posted its first sequential growth in net profit in three quarters, due to inventory restocking demand for controller chips used in handset display panels and rising demand for power management chips.

Net profit grew 18.3 percent to NT$1.16 billion (US$38.45 million) in the quarter ended Sept. 30, compared with NT$979 million in the second quarter, but fell 11.7 percent annually from NT$1.31 billion in the same period a year earlier, company data showed.

“Clients have shown stable demand for wafers in the fourth quarter,” Vanguard chairman Leuh Fang (方略) told investors. “We have two months of order visibility.”

Based on clients’ messages, Vanguard said it expects revenue to range between NT$6.2 billion and NT$6.6 billion this quarter, contracting or rising by 3 percent from NT$6.4 billion last quarter.

Revenue last quarter grew 9 percent sequentially, with controller chips used in mobile phone panels achieving the fastest quarterly growth of 63 percent, the data showed.

Gross margin is forecast to climb to between 32 percent and 34 percent this quarter, from 31.8 percent last quarter, due to rising demand for better-priced power management chips and LED lighting chips, Fang said.

Despite lukewarm near-term growth momentum, Vanguard offered a positive outlook for next year.

The firm said it expects the global supply of 8-inch wafers to become tight next year due to increasing demand for Internet of Things and automotive applications, as well as increasing semiconductor content in electronics.

Long-term efforts to diversify into the fingerprint sensor sector have begun to bear fruit, it said.

“We have landed orders from many first-tier clients... Those products will be in volume development this quarter and will extend into next year,” Vanguard sales department vice president Thomas Chang (張東隆) said.

Next year, revenue from fingerprint sensors will grow several times from this year, he said.

Power management chips, the firm’s biggest revenue contributor, are forecast to continue double-digit percentage annual growth next year, he added.

Vanguard said it aims to expand capacity by building another fab to satisfy client demand.

The chipmaker operates three factories, with average utilization topping 95 percent.

“Scouting the world for a location to build a fourth fab will be on management’s agenda in the near term,” Fang said.

The company has over the past two years evaluated several possibilities to build capacity, but it has not decided on a site, or whether to build an 8-inch or 12-inch fab, he said.

Vanguard plans to allocate NT$2 billion for capital expenditure next year to increase capacity and optimize capacity mix, stepping up the budget from this year’s NT$1.8 billion, the firm said.

Three years ago, Vanguard acquired an 8-inch fab from local chipmaker Sumpro Electronics Corp (勝普) for NT$2.18 billion. That plant added at least 12 percent to Vanguard’s annual capacity.

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