Siliconware Precision Industries Co (SPIL, 矽品精密), the world’s second-biggest chip packager and tester, yesterday reported third-quarter net profits grew 25.5 percent quarter-on-quarter and 41.1 percent year-on-year to NT$2.18 billion (US$74.16 million), driven by strong demand for consumer electronics, especially mobile devices such as smartphones and tablets.
Earnings per share (EPS) during the July-to-September period were NT$0.7, up from NT$0.56 during the April-to-June period and NT$0.5 during the same period of last year.
SPIL’s third-quarter earnings result beat analysts’ consensus of NT$2.09 billion in net profits and NT$0.68 in EPS.
“There might be inventory corrections in the PC and smartphone markets during this quarter, and that might affect the chip packaging and testing market as a whole,” SPIL chairman Bough Lin (林文伯) told an investors’ conference.
As demand for smartphones and tablets remain vigorous in China’s market, growing global shipments of mobile devices is likely to help boost demand for integrated circuit packaging and testing services next year, Lin said.
Last quarter, sales of packaging services applied in communication products accounted for 59 percent of SPIL’s total sales, down 6 percentage points from 65 percent a quarter ago, SPIL said.
Contribution from sales of packaging services for consumer electronics grew 4 percentage points to 22 percent last quarter, the company said.
As demand for chip used in game consoles continued growing with launch of new products, sales of packaging services for traditional PCs grew and accounted for 15 percent of SPIL’s total sales last quarter, up from a 13-percent stake a quarter ago.
Sales of memory products accounted for 4 percent of SPIL’s total sales last quarter, it said.
To ensure average selling price and gross margin is sustained, SPIL plans to provide more high-end testing services to customers as part of its efforts to optimize its product portfolio, Lin said.
Last quarter, sales contribution from testing services increased and accounted for 12 percent of the company’s total sales, up from a single-digit percentage point a year ago, the chairman said.
SPIL is considering providing more turnkey solutions to customers and may offer discounts for each different service in order to win more orders and outperform in the market, he added.
Because of seasonality and unstable demand in the semiconductor market, Lin forecast SPIL’s sales this quarter would face a larger-than-expected quarter-on-quarter fall from NT$19.09 billion during last quarter, adding that clients might not place new orders at a steady pace.
SPIL’s third-quarter gross margin of 23.1 percent was up from 20.9 percent in the previous quarter and 19.6 percent a year earlier. Its operating margin was 14.4 percent in the three months ending on Sept. 30, up from 10.8 percent in the previous three months and 11.2 percent the year before.
Lin did not provide sales and margin guidances for this quarter.
However, he said he expected the utilization rate would be 78-82 percent for wire-bonding packaging this quarter, down from 95 percent last quarter.
Meanwhile, the utilization rate for IC logic testing equipment may decline to 78-82 percent from 91 percent the previous quarter, but that for flip-chip ball-grid-array packaging is forecast to increase to 90-94 percent from 80 percent last quarter, Lin said.
Based on Lin's utilization rate projections for this quarter, Yuanta Securities Corp (元大證券) analyst Andrew Chen (陳治宇) yesterday said in a client note that revenue for this quarter is likely to fall by 10 percent sequentially, but gross margin could hold up at around 22 percent given the company's good product mix.
Chen forecast the company to post EPS of NT$0.6 this quarter, according to the note.
The company’s capital expenditure will be between NT$16 billion and NT$17 billion for the whole year of this year, Lin said.
SPIL’s shares closed down 2.59 percent yesterday at NT$35.7, outperforming the benchmark TAIEX, which fell 0.18 percent.
Additional reporting by Kevin Chen