Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s biggest chip packager and tester, yesterday reported a 22 percent annual decline in net profit for last quarter as a strong local currency depressed gross margins.
Net profit in the quarter that ended on Dec. 31 slid to NT$6.25 billion (US$214 million), compared with NT$7.96 billion in the fourth quarter of 2016.
Gross margin shrank from 19.9 percent to 17.6 percent in the period, as the New Taiwan dollar appreciated 5.6 percent against the US dollar, the company said.
For the whole of last year, net profit rose 6 percent to NT$22.99 billion, compared with NT$21.64 billion in 2016.
Earnings per share were flat at NT$2.82, but gross margin slid from 18.9 percent to 18.2 percent, as the NT dollar’s appreciation reduced margins by 1.5 percentage points, the company said.
CAUTIOUS OPTIMISM
A strong NT dollar will continue to weigh on gross margins this year, the company said, but added that it is cautiously optimistic about revenue growth and customer demand throughout the year.
“We are seeing strong growth in electric vehicles and power devices, as well as the high-performance computing and memory segments,” ASE chief operating officer Tien Wu (吳田玉) said.
Revenue should grow on a quarterly basis this year, following a similar pattern seen over the past few years, Wu said, but added that the growth rate would be higher than last year.
Last year, revenue expanded at an annual pace of 6 percent to reach a record NT$290.44 billion, compared with NT$274.88 billion in 2016, lagging behind the global semiconductor industry’s 9 percent growth.
ASE’s system-in-package (SiP) business last year enjoyed the strongest growth of 41 percent year-on-year, as efforts to optimize the SiP product portfolio began to bear fruit, the firm said.
The company said it expects to have a good start this year, as revenue for its core packaging and testing services should see annual growth in US dollar terms.
IMPROVING MARGIN
Gross margin for the core business should also be slightly better than a year ago, excluding the foreign-exchange factor, it added.
The Kaohsiung-based firm partly attributed this quarter’s “above seasonal” performance to robust demand from cryptocurrency mining.
“Demand is very strong now,” Wu said.
ASE expects its business to pick up strongly next quarter, with the momentum likely extending into the third quarter, Wu said.
To cope with tight supply, ASE plans to budget greater capital spending this year to boost capacity, he said.
Capital expenditure is likely to be greater than the firm’s depreciation and amortization costs, he added, without elaborating.
As for its merger with local peer Siliconware Precision Industries Co (矽品精密), ASE said that the two firms’ shares would tentatively be delisted from the main board on April 17.
A new entity, ASE Industrial Holding Co (日月光投資控股), is to begin operations on April 30.
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