Advanced Semiconductor sees orders rebound Q1

Advanced Semiconductor Engineering Inc (ASE, 日月光), the world's second-largest chip assembler, posted a less-than-expected loss in the first quarter after orders started to rebound.

Advanced Semiconductor had a first-quarter loss of NT$230 million (US$6.6 million), or NT$0.07 a share, compared with net income of NT$352 million, or NT$0.12, a year ago, the company said in a statement.

Demand increased after some unprofitable customers such as Motorola Inc shut their in-house assembly facilities and farmed out more orders to cut costs. The company is still not assured of returning to a profit by the second quarter, analysts said.

"They should be exactly at the breakeven point by the second quarter," said Helen Huang, an analyst with ABN Amro. "I'm getting the impression that the company is trying to tone down the outlook for the second quarter."

First-quarter sales were NT$10 billion, compared with NT$11.3 billion a year ago, according to figures reported monthly by the company. Second-quarter sales will grow as much as 10 percent from the first quarter, the company said.

"Our recovery has been faster than the rest of the industry,'"said Joseph Tung (董宏思), chief financial officer at Advanced Semiconductor. "We've seen an increase in outsourcing in the first quarter." Capacity use will rise to 70 percent in the second quarter from 60 percent in the first quarter, the company said. Advanced Semiconductor will spend US$280 million this year, compared with US$230 million last year, the company said.

Gross margin, which shows how much a company earned after paying production expenses, will widen by as much as 3 percent in the second quarter from the first quarter, Advanced Semiconductor said. The company expects to break even in the second quarter.

Advanced Semiconductor shares rose 1.6 percent to NT$37.60 before the earnings announcement.