Foxsemicon Integrated Technology Inc (京鼎), which counts Applied Materials Inc as a major client, expects its gross margin to improve this year after shipping more higher-margin automation systems, a company executive said yesterday.
Foxsemicon, which is 5.97 percent owned by Hon Hai Precision Industry Co (鴻海精密) through a venture capital subsidiary, said it had an unusually strong year last year due to a spike in lower-margin solar equipment orders after a major rival shut down factories.
“This year, revenue will be a bit weaker,” company spokesman Stanley Lu (呂軍甫) said. “However, we hope growing demand for automation systems will help sustain our gross margin as seen in the company’s first-quarter financial results.”
Gross margin rose to 18.2 percent in the first quarter, while net profit stood at NT$78 million (US$2.5 million), according a company filing to the Taiwan Stock Exchange. Last year, the company had a gross margin of 12.1 percent.
Lu said revenue contribution from automation systems rose to 27 percent in the first quarter and should stay at that level for the remainder of the year, compared with last year’s 22 percent.
Gross margin for automation systems is higher than for solar equipment, he said.
Semiconductor equipment, which delivers the highest gross margin, is the largest revenue source for Foxsemicon, making up 70 to 80 percent of its total revenue of NT$4.6 billion last year.
The company’s semiconductor equipment is used by industry leaders, including Intel Corp, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co.
Foxcsemicon said it supplies advanced equipment front-end modules (EFEM) to TSMC and is developing EFEM for advanced 10-nanometer processing technology as requested by the customer.
“As Taiwan’s semiconductor and LCD companies are expanding capital spending, Foxsemicon should have rosy business prospects,” Foxsemicon chairman Liu Yin-kuang (劉應光) told investors ahead of the company’s initial public offering (IPO) later this month.
Foxsemicon is cooperating with local LCD equipment supplier Usun Technology Co (陽程) to expand its LCD business, Liu said.
Despite an emerging Chinese semiconductor industry, Liu said any threat was not imminent, because Chinese rivals have weaker technological capabilities.
However, China would be a new market for Foxsemicon, as the company would vie for more equipment orders from Chinese contract chipmakers, he added.
“South Korea is a major rival, not China,” he said.
Foxsemicon is to debut its shares on the main bourse on July 28, with its IPO price tentatively set at NT$60 per share.
Last year, the company reported a net profit of NT$323.08 million, or NT$3.43 per share, up from NT$42.87 million in 2013, or NT$2.09 a share. Revenue nearly doubled from NT$2.47 billion in 2013 to NT$4.6 billion last year.
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