Vanguard International Semiconductor Corp (世界先進), a local maker of chips used in computer and television displays, yesterday reported a profit for the third consecutive quarter.
Last quarter, Vanguard earned NT$87 million (US$2.72 million), compared with losses of NT$526 million in the fourth quarter of 2008. However, on a quarterly comparison basis, the results represented a decline of 87 percent as customers reduced orders amid inventory digestion.
This quarter, the company expected to regain growth momentum as customers rebuild inventory ahead of the Lunar New Year shopping season, a new-wave of home appliance stimulus packages in China, as well as promotional sales in Europe and the US.
“We are seeing strong demand from customers this quarter and customers are optimistic about the second quarter,” company president Leuh Feng (方略) told an investor conference.
“The demand for driver ICs used in TVs, monitors, notebooks and Chinese non-branded handsets look quite good,” Feng said.
The strong first quarter bodes well for the rest of the year on the back of growing corporate PC replacement and customers’ anticipation of robust TV sales in China, company chairman Chang Ching-chu (章青駒) told reporters on the sidelines of an investor conference.
“The market demand looks quite good this year, so we are planning to expand capacity. Customers are forecasting strong demand,” Chang said. “Our major customers are focusing on the expanding Chinese [TV] market.”
Vanguard said it planned to double capital spending this year to as high as NT$2 billion from last year’s budget of less than NT$1 billion, taking its cue from major shareholder Taiwan Semiconductor Manufacturing Corp (TSMC, 台積電). Vanguard supplies around a third of its output to TSMC.
Vanguard generated 57 percent of its overall revenues of NT$3.12 billion last quarter from display driver ICs.
Reflecting the vigorous demand this quarter, capacity utilization may rebound to 75 percent from 56 percent in the fourth quarter of last year, Vanguard said.
That would translate into 25 percent shipment growth from last quarter’s 214,000 8-inch-equivalent wafers, it said.
Gross margin may bounce back to between 14 percent and 16 percent, up from 11 percent last quarter on better factory usage, it said.
The gross margin forecast surpassed HSBC Securities’ forecast of 6.2 percent. HSBC earlier this month downgraded Vanguard to neutral, saying the stock has rallied over the past month and offers limited return for investors.
Shares of Vanguard fell 0.97 percent to NT$15.35 yesterday, underperforming the benchmark TAIEX, which slid 0.7 percent.
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