Memorychip tester and packager Powertech Technology Inc (力成科技) yesterday slashed its revenue guidance for the first time in four quarters, as an inventory correction and seasonal weakness curtail demand.
Since the second half of last year, electronics companies have been snapping up components, such as DRAM and passive components, on supply constraints, which has led to an inventory surplus, Powertech said.
However, supply issues have mostly been resolved, it said.
“We are seeing a slowdown arriving earlier than before, as the peak season did this year,” company president Hung Chia-yu (洪嘉(金俞)) told investors.
“Demand is also dragged by seasonal factors and uncertainty about how the US-China trade row will play out,” Hung said.
The DRAM sector will continue to be soft, as clients demand fewer DRAM chips used in servers and in consumer electronics, such as TVs and set-top boxes, due to the inventory adjustment, Hung said.
NAND flash memory chip clients also face inventory surplus issues, he said.
As a result, revenue this quarter is to slide by a low single-digit percentage from last quarter’s NT$18.28 billion (US$589.96 million), a record high, Hung said.
That bucks an uptrend in the fourth quarter, when Powertech usually sees revenue climb to the peak of the year.
Equipment utilization rate for its chip packaging equipment is expected to fall slightly this quarter from last quarter’s 85 percent and from 80 percent for its chip testing equipment, the company said.
However, gross margin this quarter would change little from last quarter’s 21.4 percent, Hung said.
Powertech posted the best quarterly net profit in about seven years for the quarter that ended on Sept. 30, benefiting from robust growth in its flash memory business.
Net profit last quarter rose 10.2 percent quarter-on-quarter to NT$2.28 billion, compared with NT$2.07 billion in the second quarter. That represented an annual growth of 13.6 percent from NT$2 billion.
Gross margin last quarter improved to 21.4 percent from 21.2 percent in the previous quarter and 21.1 percent in the third quarter last year.
Powertech attributed the performance to robust growth in its NAND flash memory chip packaging and testing business, given increasing adoption of solid-state drives that contain NAND flash memory chips to replace hard drives.
Revenue from NAND flash memory chip packaging and testing services last quarter jumped 17.6 percent quarter-on-quarter, while DRAM revenue contracted 3.8 percent.
NAND flash memory business contributed 45 percent of the company’s total revenue last quarter, while DRAM made up 29 percent.
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