Deutsche Bank says semiconductor firms may see slowdown

By Kevin Chen  /  Staff reporter

Sat, Jul 13, 2013 - Page 13

Taiwan’s semiconductor firms are forecast to experience a modest increase in sales this quarter after reporting steady growth last quarter, Deutsche Bank AG said.

The projected slowdown in sequential sales growth comes as market worries about the sector’s downside risks from inventory digestion and weaker-than-expected demand for highend smartphones increase.

However, two Taipei-based researchers at the German bank in a report issued yesterday questioned to what extent such worries could impact on the sector, which includes wafer foundries, integrated circuit (IC) assemblers and testers, as well as fabless IC designers and distributors.

“Concerns over high inventory risks could be overblown,” Deutsche Bank researchers Michael Chou (周立中) and Jessica Chang (張幸宜) said in the report.

Based on the bank’s recent IC inventory survey among major fabless companies worldwide, Chou and Chang said global fabless inventory days might have peaked in the April-to-June quarter and would show a downward trend in the second half of the year to provide support to the semiconductor sector as a whole.

The report came after most Taiwanese semiconductor firms released their sales results for the last quarter over the past few days, which were either in line with or beat sales guidances they had previously offered.

On Wednesday, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest foundry, said last quarter’s revenue reached NT$155.89 billion (US$5.21 billion), hitting the high end of its previous forecast and representing 17.43 percent sequential growth from the first quarter.

On Tuesday, Advanced Semiconductor Engineering Inc (ASE, 日月光), the world’s largest chip packager and tester, also said its revenue for the last quarter exceeded its previous guidance to hit a record-high of NT$36.3 billion, while MediaTek Inc (聯發科), the nation’s biggest handset chip designer, said last week that its revenue for the last quarter totaled NT$33.27 billion, higher than the NT$30 billion to NT$31.6 billion it projected in May because of strong quad-core and dual-core smartphone chip shipments.

Still, there is potential for a slowdown in sales growth, Deutsche Bank said.

“We expect sales growth for these companies to be modest in the third quarter, given a maturing high-end smartphone market and a high base in the first half of this year,” Chou and Chang said.

TSMC is expected to see revenue expand by between 8 percent and 10 percent from last quarter, while United Microelectronics Corp (UMC, 聯電) could post an increase of between 5 percent and 7 percent in sales from NT$31.9 billion last quarter.

In the assembly and testing segment, Deutsche Bank said ASE could report an 8 percent sequential sales growth this quarter and forecast a 10 percent growth for Siliconware Precision Industries Co (矽品) after its revenue rose 27.4 percent last quarter to NT$17.6 billion from the first quarter.

MediaTek, whose second-quarter sales exceeded Deutsche Bank’s estimates, is likely to register a moderate top-line growth of around 5 percent this quarter due to a high base last quarter, the bank said.

Deutsche Bank also anticipated that touch-panel controller chip supplier Elan Microelectronics Corp (義隆) would see a modest growth in revenue this quarter after last quarter’s numbers rose 15.76 percent to NT$2.16 billion from the previous quarter.

Nevertheless, the limited inventory adjustments are likely to cause these companies to report sales declines next quarter in a range of between one percent and 11 percent from this quarter, according to the bank.