Vanguard International Semiconductor Co’s (VIS, 世界先進) growth momentum showed signs of decelerating last month, after the supplier of driver integrated circuits (ICs) used in flat panels reported that sales edged down from a record-high level in July.
While the company’s near-term outlook may be hit by potential industry-wide risk in the semiconductor and flat panel sectors, its long-term prospects are expected to be lifted by demand for analogue chips and micro electro-mechanical system (MEMS) components, analysts said.
In addition, Vanguard’s recent acquisition of Sumpro Electronics Corp’s (勝普) 8-inch fab and equipment would help boost its earnings growth, they added.
Vanguard — majority owned by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and the government’s National Development Fund — reported on Tuesday last week its consolidated sales dropped 0.7 percent month-on-month, but rose 9.36 percent year-on-year to NT$2.05 billion (US$68.2 million) last month.
Cumulative revenue in the first eight months of the year amounted to NT$15.45 billion, an increase of 10.78 percent from the previous year, Vanguard said in a filing with the Taiwan Stock Exchange.
Capital Securities Corp (群益證券) has forecast the company’s third-quarter shipments will grow by between 6 percent and 8 percent from the second quarter, with revenue set to increase by 7.77 percent to NT$6.27 billion from the second quarter.
Hsinchu-based Vanguard is a pure 8-inch foundry supplier focusing on market applications such as power management and LCD driver ICs.
The company operates two 8-inch fabs with a combined capacity of 140,000 wafers per month and will see its monthly capacity expand to 163,000 wafers after acquiring the Sumpro fab from Nanya Technology Corp (南亞科技) in July.
Maybank Kim Eng Securities Ltd said last week that the new fab would expand Vanguard’s capacity by between 25 percent and 30 percent for this year and next year and by a further 20 percent to 25 percent in 2016 and beyond.
“While the conversion of Sumpro’s capacity may result in a short-term dip in profitability, we believe the new capacity will sustain VIS’ earnings to grow 20 percent” starting this year, Maybank Kim Eng’s Hong Kong-based analyst Warren Lau (劉華仁) said in a client note on Wednesday last week.
Lau said the company would also benefit from the potential growth of the Internet of Things (IoT) and various smart applications.
Lau said foundries around the world have over the years spent most of their capital expenditure on leading-edge nodes and 12-inch wafer capacity.
However, demand for 8-inch wafer capacity is still on the rise as volume growth of consumer electronics has consistently pushed up the use of chips in power management, display drivers, audio codecs and other sensors, he said.
In addition, a potential growth in analogue chips and MEMS components amid rapid demand for wearable devices and the IoT cannot be underestimated, he said.
“The popularity of the IoT will further drive demand for 200mm wafer capacity to produce chips for such devices as radio frequency, global positioning systems, near field communications, Bluetooth and various sensing ICs,” Lau said.
However, he added that Apple’s slowing innovation would likely have implications for supply-chain firms.
Vanguard shares rose 2.38 percent to close at NT$43 on Friday in Taipei trading, increasing the year’s gain to 21.47 percent, according to GRETAI Securities Market data.
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