Vanguard International Semiconductor Co (世界先進) generated net income of NT$1.67 billion (US$54.3 million) in the third quarter, an increase of 44.08 percent from a year earlier, thanks to rising wafer demand and factory utilization, as well as favorable foreign-exchange rates and a better product mix.
Earnings per share reached NT$1.01, compared with NT$0.71 in the same period last year, the Hsinchu-based company reported on Tuesday last week.
Vanguard said it expects fourth-quarter revenue to be between NT$7.6 billion and NT$8 billion, after reporting revenue of NT$7.75 billion in the previous quarter.
“Looking forward, we anticipate to maintain stable wafer demand from customers,” Vanguard vice president and chief financial officer Tseng Dong-liang (曾棟樑) said in a statement.
Gross margin for last quarter was 36.03 percent, while operating margin was 25.58 percent, the statement said, adding that prospects for this quarter are good, with gross margin expected to be from 36.5 to 38.5 percent and operating margin 25.5 to 27.5 percent.
Vanguard is a foundry supplier focused on market applications such as power management and ICs for LCD drivers.
In early September, the firm was hit by a power disruption at its Taoyuan fab, which it had expected would delay wafer shipments from the facility and increase manufacturing costs, but the third-quarter results indicated that the incident had a limited effect.
However, weakening market confidence in the global economy amid growing trade tensions between the US and China poses uncertainty for Vanguard’s business next year, chairman Fang Leuh (方略) said.
The company does not plan to expand capacity substantially next year, but is considering an increase in capital expenditure of up to 80 percent to between NT$3.5 billion and NT$3.6 billion, compared with NT$2.1 billion this year to improve clean rooms and other facilities at its Fab 3 in Taoyuan, Fang said in a recording of a conference call posted on the company’s Web site.
While Vanguard’s near-term outlook might face macroeconomic risks, its guidance for the fourth quarter is better than those of its peers, Jih Sun Securities Investment Consulting Co (日盛投顧) analyst Simon Lu (呂金源) said in a research note on Wednesday last week.
“Given the trend of large-sized TVs and higher-resolution panels, the fabrication demand related to display ICs will remain solid in 2019,” Lu said.
“As for discrete device and power management ICs, Vanguard is expected to secure more orders than its peers, because its clients are major global vendors that do not have 8-inch fabs to do IC fabrication on their own,” he said.
Capital Investment Management Corp (群益投顧) said Vanguard’s 8-inch foundry capacity would remain tight this quarter on strong demand momentum for power devices.
“The company’s capacity for this quarter is forecast to increase 1 percent to 270,000 wafers per month, with the power management IC fabrication business becoming a main revenue driver,” Capital Investment analyst Chen Li-yen (陳俐妍) said in a note.
Vanguard shares closed at NT$60.9 in Taipei on Friday, up 22.04 percent for the week, but down 7.73 percent this year.
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