Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s largest IC packaging and testing services provider, said that profitability declined in the first quarter of this year due to a seasonal slowdown, a product-mix adjustment and foreign-exchange losses.
On a consolidated basis, gross margin decreased 2 percentage points year-on-year and 1.6 percentage points quarter-on-quarter to 16 percent, while operating margin was 6.6 percent, compared with 7.9 percent a year earlier and 9.2 percent in the previous quarter, the Kaohsiung-based company said in a financial statement on Friday last week.
The company attributed the deteriorated margins to adjustments in its product portfolio and appreciation of the New Taiwan dollar against the US dollar.
The NT dollar averaged NT$29.33 against the greenback in the first quarter, up 6 percent from an average NT$31.2 during the same period last year, which negatively affected the company’s core IC assembly, test and materials (IC ATM) business, ASE chief finance officer Joseph Tung (董宏思) told an investors’ conference in Taipei.
Net income attributable to the parent company for the January-to-March period dropped 18.09 percent to NT$2.096 billion (US$70.7 million) — the lowest in six years — from NT$2.559 billion in the same period last year, and plunged 66.44 percent from NT$6.246 billion in the final quarter of last year.
Last quarter’s earnings per share reached NT$0.25, compared with NT$0.33 a year earlier and NT$0.74 the previous quarter, according to the statement.
The company’s consolidated revenue was NT$64.97 billion last quarter, down 2 percent year-on-year and 23 percent sequentially, with contributions from its packaging, testing and electronic manufacturing services (EMS) operations accounting for 45 percent, 9 percent and 44 percent respectively.
Given the company’s current order visibility and foreign-exchange rate assumptions, ASE said its IC ATM business in the second quarter should be better than a year earlier in US dollar terms, with gross margin, excluding the effect of foreign-exchange rates, likely be flat year-on-year.
This quarter’s orders from the EMS business should reach levels seen during last year’s second and third quarters, with gross margin likely to improve slightly from last quarter, it added.
Recent price hikes in passive components, fluctuations in cryptocurrency mining and the US-China trade row should have only a limited effect on ASE operations in the short-term, but the company is paying close attention to future developments, Tung said.
ASE shares closed at NT$44.5 on the Taiwan Stock Exchange on April 17, the last trading day for shares of the company and its acquisition target Siliconware Precision Industries Co Ltd (SPIL, 矽品精密) as separate entities. SPIL shares closed at NT$51.
The new combined entity, named ASE Industrial Holding Co (日月光投資控股), is to begin trading today in Taiwan and on the NASDAQ composite in the US.
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