Vanguard International Semiconductor Corp (世界先進) yesterday said it expects sales this quarter to be flat or decline slightly from last quarter’s NT$5.29 billion (US$161 million) due to continued weak demand from clients.
“The overall demand this quarter is expected to improve mildly from last quarter, but the demand is still soft due to clients’ high inventory levels,” Vanguard chairman and president Fang Leuh (方略) told reporters after an investors’ conference in Taipei.
Vanguard, which manufactures controller chips for LCD panels, foresees sales this quarter to reach between NT$5.1 billion and NT$5.4 billion, down 3.59 percent or up 2.07 percent from the previous quarter, Fang said.
The firm again trimmed its capital expenditure for this year to NT$1.6 billion from its estimate last quarter of NT$1.7 billion, Fang said.
Under the adjusted capital expenditure plan, Vanguard’s monthly production is expected to fall 1 percent quarterly to 181,000 wafers, he added.
While the factory utilization rate is relatively low due to an expected decline in wafer shipments, Fang said the firm has adopted several measures to reduce costs, such as shutting down idle machines.
In light of the lower factory utilization rate, the company’s gross margin is forecast to slide by about 1 percentage point to 26 percent from the previous quarter’s 27.2 percent, Fang said.
Operating margin is expected to decline to 15.5 percent from 16.9 percent in the third quarter, he said.
Although clients’ inventories have not yet returned to a healthy level, the speed of inventory correction this quarter is faster than in the previous quarter, which is a good sign for the industry, Fang said.
“Clients might complete their inventory correction no later than the first quarter of next year,” he said.
Looking forward, Fang said the outlook for the industry next year is likely to be better than this year.
“However, it all depends on the actual end demand in the markets,” he said.
Fang’s remarks came after Vanguard reported its weakest quarterly net income of NT$851 in the past 11 quarters as customers worked with an inventory glut.
Net profit plunged 35.8 percent from last year’s NT$1.32 billion and 19.9 percent from the previous quarter’s NT$1.06 billion.
Earnings per share were NT$0.51, compared with NT$0.8 a year earlier and NT$0.64 the previous quarter.
Vanguard shares grew 0.24 percent to NT$41.6 yesterday, outperforming the TAIEX, which lost 1.1 percent.
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