Formosa Advanced Technologies Co (福懋科技), a memorychip tester and packager that is 65 percent owned by Formosa Plastics Group (台塑集團), yesterday said it is conservative in its outlook for this quarter amid US-China trade tensions and weakening smartphone demand aggravated by a supply shortage of microprocessors.
The Yunlin County-based firm is the latest electronics company to voice concern over the tit-for-tat tariffs between the world’s two biggest economies, which could affect the global economy and sales.
Some major chipmakers have decided to scale down capital investments in response to growing economic uncertainty, threatening to end the “super cycle” experienced by the DRAM industry over the past nine quarters.
“Customers hold a more reserved [business outlook] for the fourth quarter, because of the US-China trade war and the shortage of CPU supplies,” company executive vice president Solomon Chang (張憲正) told investors in Taipei.
“It requires close monitoring to [get a clearer view] about next year’s outlook,” as the effects of the trade spat and other factors remain volatile, Chang said.
Revenue next year might continue to grow thanks to higher-priced DDR4 chips and a share gain in the multichip packaging market, extending this year’s momentum, he said.
The revenue contribution from DDR4 chips is expected to account for 20 percent of total revenue this year, compared with 5 percent last year, Chang said.
DRAM chips used in mobile devices, servers, and consumer electronics and computers are the main contributors to the firm’s revenue.
In the first three quarters of this year, the company saw revenue climb 9.7 percent to NT$6.56 billion (US$212.39 million), from NT$5.98 billion in the same period last year, thanks to price increases and robust demand.
Net profit showed stronger growth, increasing 19.2 percent annually to NT$1.19 billion in the January-to-September period from a year earlier, while earnings per share rose from NT$2.25 to NT$2.69.
Gross margin increased from 15.9 percent to 20.8 percent as the company shipped DDR4 chips with higher margins, offsetting increases in equipment depreciation costs in the second half of this year.
To handle rising demand and the migration of major customers to more advanced technologies, the firm plans to raise capital spending by about 80 percent to NT$2.86 billion this year, from NT$1.59 billion last year, the company said.
Most of the spending would go toward advanced DRAM DDR4 testing equipment, it said.
Shares in the company rose 0.31 percent to NT$31.9 in Taipei trading yesterday.
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