Memorychip packager and tester Powertech Technology Inc (力成科技) yesterday said that customer demand is recovering from a slump, thanks mainly to exuberant end demand for mobile phones, diminishing inventory and easing US-China trade tensions.
The company’s positive outlook is a reversal to pessimism to an industry correction caused by macroeconomic uncertainty and excessive memorychip inventory in the second quarter.
Net profit in the second quarter fell 24.8 percent to NT$1.1 billion (US$35.38 million), compared with NT$1.68 billion in the same period last year.
That translated into earnings per share of NT$1.42 last quarter, down from NT$2.16 a year ago.
On a quarterly basis, net profit improved 4.8 percent from NT$1.05 billion, or earnings per share of NT$1.36.
“This year will be a tough one for the global semiconductor industry, especially for the memory [industry]. However, the toughest period has passed,” Powertech president Hung Chia-yu told investors.
“Seasonal changes, especially increasing demand for smartphones, are driving the DRAM market in the second half, as consumption of mobile DRAM has surpassed half of total DRAM chip consumption,” Hung said.
In addition to mobile DRAM, demand for NAND flash memory used in mobile phones has shown even stronger momentum this quarter, he added.
“Over the past one or two weeks, customers have been chasing us for more supply,” Hung said. “Customer demand has exceeded what the industry can supply.”
Powertech reported revenue of NT$15.08 billion for last quarter, with packaging and testing services for NAND flash memory contributing 35 percent and DRAM making up 27 percent.
A temporary truce between the US and China in their trade war is fueling an optimistic sentiment in the industry, and Powertech said that it has seen orders from returning customers, who have also indicated that the quarters-long inventory digestion is likely to be completed in the third quarter.
Overall utilization for Powertech’s chip packaging equipment is forecast to climb to 80 percent this quarter, from about 60 percent last quarter, Hung said.
Higher equipment usage would boost the company’s gross margin this quarter, compared with last quarter’s 17.2 percent, he said.
Meanwhile, Powertech expects Micron Technology Inc’s plan to trim production by only 5 to 10 percent this quarter would not significantly erode its recovery in the second half of the year.
However, Powertech is closely monitoring whether Japan’s export curbs on key semiconductor materials to South Korea would benefit the local DRAM chip industry, it said.
Powertech shares yesterday rose 0.12 percent to NT$80.3 in Taipei trading.
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