Memorychip tester and packager Powertech Technology Inc (力成科技) yesterday said that its first-quarter net profit declined 22 percent sequentially mainly due to foreign-exchange losses and seasonal weakness, but that it expects revenue to pick up this quarter as demand recovers.
Net profit fell to NT$1.29 billion (US$43.56 million) last quarter, compared with NT$1.66 billion in the final quarter last year. That translated into earnings per share of NT$1.66, down from NT$2.12.
Powertech said it booked NT$200 million in foreign-exchange losses last quarter as the New Taiwan dollar appreciated 2.35 percent versus the US dollar during the period.
Gross margin slid to 20.4 percent from 21.5 percent as its two Japanese acquisitions and a new fab in Xian, China, dragged down overall margins, the company said.
The Xian fab is a joint venture with US memorychip maker Micron Technology Inc.
However, Powertech expects a recovery amid rising demand in the mobile phone and ultra-thin laptop sectors this quarter.
“The first quarter was the most painful period. It is over now,” Powertech general manager Hung Chia-yu told an investor conference. “Overall, we are positive about the second quarter. Customer orders for the second and third quarters look quite sturdy.”
Stronger revenue last month points to a recovery, Hung said.
Sales hit a record NT$5.65 billion last month, up 16 percent from February, a company filing with the Taiwan Stock Exchange showed.
First-quarter revenue shrank 4.8 percent sequentially to NT$15.91 billion, of which 39 percent came from flash memory chips and 34 percent from DRAM.
However, prospects are improving on rising demand for mobile DRAM ahead of new model launches by the world’s major brands as well as for flash memory chips due to rising penetration of solid-state drives in notebook computers.
Demand from the automotive, consumer electronics and communications segments is also gaining traction, Hung said.
For the full year, the memory industry should see a healthy supply and demand balance, but key component supply constraints could be a major downside risk, Hung said.
The company has experienced a short supply of passive components, substrates and 8-inch wafers since last year, he said.
On top of that, the US-China trade row poses another uncertainty, Hung said.
To cope with rising demand, Powertech is increasing its capital expenditure this year. It plans to invest NT$15 billion on new equipment and facilities this year, with 30 percent of the amount going into capacity expansion.
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