Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s top chip-packaging and testing firm, yesterday posted a net profit of NT$4.96 billion (US$171 million) in the fourth quarter, falling 9.12 percent from the third quarter, as the rising local currency eroded earnings.
Net income expanded 9.3 percent during the period between October and last month from the year-earlier level on improving demand as the world continued its emergence from the global financial crisis.
Joseph Tung (董宏思), chief financial officer at the Kaohsiung-based company, said foreign exchange volatility blotted out 1.8 percent of profitability in the fourth quarter and that the impact would continue this year.
“For every dollar gained in the local currency, ASE’s revenue will drop about 3 percent,” Tung told an investors conference. “The revenue saw a tiny gain in the US dollar term otherwise.”
In the last three months of last year, the New Taiwan dollar picked up 3.07 percent, strengthening from NT$31.33 to NT$30.368 against the greenback on Dec. 31. ASE expects the NT dollar to strengthen to NT$29 this quarter.
However, the gross profit margin improved to 22.3 percent at NT$11.9 billion in the fourth quarter, from 21.6 percent at NT$11.15 billion three months earlier, thanks to a non-operating income of NT$3.48 billion from a land sale in China, Tung said.
Tung offered an upbeat forecast for the current quarter and this year as strong demand for smartphones is expected.
“We don’t see a slow first quarter during which the utilization rates hit 95 percent and 85 percent for packaging and testing respectively, as in the fourth quarter,” he said. “There are no Lunar New Year holidays and we will have to work overtime in March to fill orders.”
Tung said ASE, whose customers include the world’s leading computer makers Hewlett-Packard Co, Lenovo (聯想) and Toshiba, will become the biggest beneficiary among all competitors if demand for tablet computers heats up later this year.
ASE led peers in switching to the more cost-effective copper wire bonding technology and benefited from this early conversion.
For all of last year, net income totaled NT$18.43 billion, increasing 9.8 percent from a year earlier, and translating into NT$3.05 earnings per share.
“Overall, it was a good year for ASE last year as its market share increased 2 percent, while core business expanded 47 percent,” Tung said.
Looking forward, ASE expects to outperform the semiconductor industry in terms of sales growth and widen the edge over its rivals, Tung said.
JPMorgan maintained an overweight view on ASE shares, although the brokerage house trimmed its forecast for the company’s earnings this year to reflect foreign exchange losses.
“We believe ASE’s cost--effective technology is broadening customer interests and helping gain market share,” the broker said in a statement.
The company’s stock shed 1.35 percent to NT$36.6 at close of trade yesterday, while the TAIEX gained 0.47 percent.
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