Advanced Semiconductor Engine-ering Inc (日月光半導體), the world's No.1 contract chip assembler and tester, yesterday reported tepid quarterly earnings, but said it expects sales to grow this coming quarter, driven by rising orders and strengthening market position.
"Our revenues will increase further by a high single digit percent in the third quarter primarily boosted by rising demand mostly from the computer industry," said chief financial officer Joseph Tung (董宏思).
Advanced Semiconductor, which counts graphic chip giants ATI Technologies Inc and Nvidia Corp among its top 10 customers, said it expects sales to the computer industry to increase from the current 30 percent.
Advanced Semiconductor will stick to the previous target of hitting a 50 percent increase in revenue at an annual rate, Tung said.
The Kaohsiung-based company is expecting its revenue to shoot up to NT$75 billion this year based on the NT$50 billion the company posted last year, he said.
In the second quarter, the company said net income grew nearly fivefold to NT$2.02 billion, or NT$0.55 a share, from NT$360 million a year ago. The result repre-sents a 23-percent rise from NT$1.64 billion quarter on quarter.
The growth brought earnings to NT$3.66 billion, or NT$0.99 per share, a spike from NT$12 million, or NT$0.004 a share, a year ago.
"But the gross margin fell short of my expectations, which should be a result of faster-than-expected growth in the lower-margin camera module area," said Wang Bou-li (王博立), a semiconductor analyst with SinoPac Securities Corp (建華證券).
Wang expected the gross margin would rebound to around 24 percent as the company said three months earlier.
In the third quarter, the gross margin will inch up to 23 percent from the current 22 percent, Tung told investors.
"We are not under heavy price pressure. We expect the average selling price to remain stable in the current quarter," he said.
The company's positive prospects are a stark contrast to the dismal guidance US rival Amkor Technology Inc gave for the second half of this year, citing mounting inventory.
"While the third quarter is typically a seasonal growth for Amkor, we anticipate that the current inventory correction will impact this seasonality," said Bruce Freyman, Amkor's chief operating officer, in a statement released on July 27.
"We're still seeing a sequential growth in the fourth quarter," Tung said. "Inventory problem will not have a sever impact on us."
The utilization rate will improve from the current 75 percent to 85 percent, he said.
But, the optimistic outlook is still not convincing enough for doubters such as Wang.
"High inventory built up in the prior period is still a concern for the semiconductor industry as a whole as customers could turn cautious about order replacement," Wang said. "Those stockpiles will take some time to write off."
Advanced Semiconductor shares rose by 1.35 percent to NT$22.6 on the TAIEX yesterday.
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