Wed, Jul 25, 2018 - Page 12 News List

Powertech posts robust Q2 net profit

ROSY OUTLOOK:The chip tester and packager sees little impact from the row between UMC and Micron Technology, and expects continued growth as it enters its peak season

By Lisa Wang  /  Staff reporter

Memorychip tester and packager Powertech Technology Inc (力成科技) yesterday reported its strongest quarterly earnings in seven years, aided by growth in flash memory chips and a favorable foreign exchange rate.

Net profit last quarter rose 30 percent to NT$1.68 billion (US$54.69 million) from NT$1.29 billion in the first quarter, the company’s financial statements showed. Earnings per share increased to NT$2.16 from NT$1.66.

Gross margin improved to 21.2 percent last quarter from 20.9 percent in the previous quarter, company data showed.

That re-enforced Powertech’s confidence about revenue growth for the full year, despite potential impact from the patent infringement lawsuits between its major customer, Micron Technology Inc, and United Microelectronics Corp (UMC, 聯電) in China.

A ruling by the Fuzhou Intermediate People’s Court in favor of UMC early this month weighed on Powertech’s share price.

“Based on our understanding, the lawsuits only affect Micron’s production of SSD [solid-state drives] and memory modules. Its wafer business remains intact,” Powertech chairman D.K. Tsai (蔡篤恭) told an investors’ conference.

“We do not see any substantial impact on our company,” Tsai said.

Micron contributed 25 percent to Powertech’s overall revenue, the company said.

Powertech said it remains optimistic about its prospects this year.

“We have weathered through the most difficult period in the first and second quarters. We have overcome the ordeal. Our businesses were strong, extending the momentum from the fourth quarter last year,” Powertech general manager Hung Chia-yu told investors.

“As the industry is entering its peak season, we expect that revenue in the second half will be much higher than in the first half, in line with historical trends,” Hung said.

For the full year, the company’s revenue growth should outpace that of the local semiconductor industry, which is forecast to expand by 7.1 percent, according to the Industrial Economics and Knowledge Center (產業經濟與趨勢研究中心), Hung said.

“Mobile phones continue to be an important growth driver [this year] in terms of end demand, although the growth rate is decelerating. We still see growth in high-end smartphones equipped with new features like artificial intelligence,” Hung said.

Powertech expects the NAND flash memory chip growth momentum to magnify this quarter, as most mobile phone vendors are set to launch new models later this year, which should fuel demand for data storage eMMC or eMCP modules that contain flash memory chips.

“NAND flash chips will enjoy the strongest growth in the third quarter, faster than DRAM and logic [chips]. It will be a main growth engine,” Hung said.

NAND flash memory chips made up 40 percent of its revenue last quarter.

The company also sees strong demand and growth from the DRAM segment, especially those used in consumer electronics, such as TVs, set-top boxes and vehicles.

Powertech’s first-half revenue increased 24.6 percent year-on-year to NT$33.12 billion, thanks to robust customer demand and the acquisitions of two Japanese subsidiaries.

Net profit in the first two quarters expanded 14.3 percent year-on-year to NT$2.97 billion, compared with NT$2.58 billion in the same period last year. Earnings per share climbed to 3.82 from NT$3.31.

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