Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s largest chip tester and packager, yesterday reported that net profit fell 28 percent sequentially to NT$4.56 billion (US$135.7 million) last quarter due to slowing demand and expenditure for the purchase of Siliconware Precision Industries Co (SPIL, 矽品精密) shares.
With inventory correction now over, the company expects to see “mild growth” this year, chief operating officer Tien Wu (吳田玉) told investors.
“We believe we will go through [a weak] season in the first quarter, but will resume sequential growth from next quarter through the end of the year,” Wu said.
The company expects to outpace the semiconductor industry’s forecast growth of 2 percent this year, Wu said.
ASE expanded its revenue by 10 percent to NT$283.3 billion last year, compared with NT$256.59 billion in 2014.
“In December, we started receiving short orders. We believe that this is an early indicator that people are coming back,” Wu said, but added that visibility for end demand was not clear given lingering macroeconomic concerns. .
The company last year generated US$2 billion in revenue from its system-in-a-package (SiP) business. That represented more than 20 percent of its total revenue for the year, Wu said.
SiP is expected to remain a key growth engine for ASE over the next five to 10 years, he said.
ASE provides SiP services for fingerprint modules used in Apple Inc’s iPhones as well as in wearable devices for other clients.
For this quarter, the company said that its SIP business might experience weak seasonal demand due to product transition at clients.
As a result, the utilization rate for its core chip testing and packaging services is expected to drop by a high-single digit percent this quarter from last quarter, the company said.
Gross margin for the firm’s core business is expected to fall to 24 percent this quarter, from last quarter’s 26 percent, it added.
ASE’s net profit declined 28 percent to NT$4.56 billion last quarter from the prior quarter and contracted by 42 percent annually.
For the whole of last year, net profit shrank 19.4 percent to NT$19.05 billion from NT$23.64 billion in 2014.
ASE yesterday also said it would extend its tender offer month to purchase the remaining shares of rival SPIL by one month.
ASE currently has about a 25 percent stake in SPIL.
SPIL yesterday reported quarterly losses of NT$212 million for last quarter due to asset impairments of NT$3.28 billion, partly from its holding of printed circuit board maker Unimicron Technology Corp (欣興電子). That compares with a net profit of NT$3.68 billion in the third quarter.
SPIL chairman Bough Lin (林文伯) said client inventory corrections had ended and he expected restocking demand to start at the end of this quarter.
Handset demand from emerging markets are also showing signs of improvement, he said.
Even so, revenue for this quarter could be lower than last quarter’s NT$20.77 billion, as factory utilization is expected to decline, Lin said.
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