Wed, Jan 15, 2020 - Page 12 News List

Powertech net profit hits historic high

REBOUND IN DEMAND:About 70 percent of laptops and desktop computers are equipped with SSD storage, up from 50 percent in October last year, the firm said

By Lisa Wang  /  Staff reporter

Memorychip packager and tester Powertech Technology Inc (力成科技) yesterday said that net profit last quarter reached an all-time high, largely due to a recovery in demand for NAND flash memory chips.

Powertech’s net profit last quarter increased 30.3 percent quarter-on-quarter to NT$2.08 billion (US$69.47 million) from NT$1.6 billion in the third quarter of last year, while earnings per share rose to NT$2.68 from NT$2.06, the company said.

On an annual basis, net profit surged 53.1 percent from NT$1.36 billion in 2018, or earnings per share of NT$1.75, the firm said.

“Fourth-quarter revenue grew at a quarterly pace of 9.1 percent to NT$19.31 billion, which was unexpected and better than our estimate of 5 percent growth,” Powertech president Hung Chia-yu told investors in Hsinchu.

The company started installing new manufacturing equipment since the third quarter last year to cope with rebounding demand last quarter, which was rarely seen before, Hung said.

“The outlook for the first quarter is quite good. Revenue will grow significantly — the highest of any first quarter — extending the strong growth momentum from the fourth quarter of last year,” Hung said.

Over the past few years, first-quarter revenue fell at a quarterly pace of 8 to 12 percent, given seasonal corrections, Hung said, adding that this quarter would be an exception, with revenue falling by only a low-single-digit percentage.

Similar to last quarter, growth would be driven by testing and packaging services for NAND flash memory chips and system-in-package (SiP) modules, he said.

Increasing market penetration of new solid-state disk (SSD) storage for computers, flagship smartphones and servers has fueled demand for NAND flash memory chips, he said.

About 70 percent of laptops and desktop computers are equipped with SSD storage, instead of hard disks, up from 50 percent in October last year, the company said.

Revenue last quarter from testing and packaging services for NAND flash memory chips increased 14.5 percent quarter-on-quarter, while SiP modules increased 20.9 percent, the company said.

The NAND flash memory business contributed 41 percent of revenue, while the SiP module business contributed 10 percent — both larger shares than a year earlier, it added.

Demand from PC DRAM clients this quarter is expected to be stable, as chip demand and prices have been improving, Hung said.

Powertech said that it has an optimistic outlook on the year, primarily because the commercial launch of 5G networks should fuel demand for portable devices such as laptops, mobile phones, wearable devices and 5G-enabled base stations.

The company said that it plans to spend about NT$10 billion on new facilities and equipment, down slightly from last year’s NT$11 billion.

Net profit last year shrank 6.3 percent to NT$5.84 billion from NT$6.23 billion in 2018, as US-China trade tensions added to already sluggish demand for PCs, smartphones and excess inventory, while earnings per share last year fell to NT$7.52 from NT$8.02 in 2018, company data showed.

Gross margin last year fell to 19.1 percent from 20.3 percent in 2018, while revenue fell 2.2 percent to NT$66.53 billion from NT$68.04 billion in 2018, beating the company’s expectation of an 8 percent year-on-year decline, the data showed.

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