Pegatron Corp (和碩), one of Apple Inc’s iPhone assemblers, yesterday saw its shares plunge 6.47 percent after reporting worse-than-expected earnings for last quarter on Tuesday.
Net profit dropped 36 percent year-on-year to NT$1.33 billion (US$43.01 million), with earnings per share of NT$0.51, the lowest since the second quarter of 2012, company data showed.
Operating income fell 80.5 percent to NT$419 million, compared with NT$2.15 billion a year earlier, the data showed.
Pegatron mainly attributed the decrease to sluggish iPhone sales, along with poor performances at subsidiaries including Casetek Holdings Ltd (鎧勝控股) and Kinsus Interconnect Technology Corp (景碩科技).
Apple reported that iPhone sales in the first quarter declined 17 percent and has reportedly cut prices to boost demand in China as its flagship product continued to struggle.
Metal casing unit Casetek reported an operating loss of NT$552.39 million for the quarter ending March 31, or losses per share of NT$1.58, mainly due to low client demand and a new production site failing to reach economies of scale.
Kinsus, an IC substrate maker for semiconductor companies, reported an operating loss of NT$628.38 million last quarter, or losses per share of NT$1.67, due to low utilization rates and the amortization of an old production site in Hsinchu County’s Sinfong Township (新豐).
Fewer working days in the first quarter also contributed to the decline in profits, Pegatron said.
However, revenue increased 4.77 percent from NT$280.89 a year earlier to NT$294.29 billion thanks to sales increases of 13 percent and 28 percent for communications products and consumer electronics respectively, it said.
Pegatron did not offer a guidance for this quarter.
CEO S.J. Liao (廖賜政) in March gave a conservative outlook for the whole year, citing an unresolved trade conflict between the US and China.
To avoid tariffs the two sides have levied on each other, Pegatron said that it has been gradually setting up new production lines in Southeast Asia, as well as expanding existing sites in Mexico and the Czech Republic.
A production site in Indonesia started shipments earlier this year, it said.
Yuanta Securities Investment Consulting Co (元大投顧) said that the first quarter should be the trough, as earnings contribution from Pegatron’s assembly business would remain steady this quarter and losses at its affiliates would continue to narrow.
“We believe its subsidiaries’ losses will gradually narrow on a quarterly basis, mainly due to Casetek and Kinsus seeing improving yield rates in the second half of this year. This should boost Pegatron’s profitability,” Yuanta said in a note.
Next-generation iPhone series shipments should kick in from the second half of next quarter to add further growth momentum, it said.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
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