GlobalWafers Co (環球晶圓) yesterday reported its first quarterly decline in net profit in about three years, as excess inventories and economic uncertainties dented demand last quarter.
Global trade tensions have led the world’s No. 3 silicon wafer supplier to trim its revenue forecast for this year from “mild” growth to zero, compared with last year’s NT$59.06 billion (US$1.87 billion).
That would end the company’s revenue growth streak that has been running since 2016.
“The global uncertainty is worse than my expectations, compared with [that during] the annual general meeting” in June, GlobalWafers chairperson Doris Hsu (徐秀蘭) told an investors’ teleconference.
This year, “our overall performance will be pretty close to last year in terms of top-line or bottom-line results,” she said.
GobalWafers has seen some signs of stabilization and recovery in the second half of the year, as indicated by most customers’ lower inventories and their positive business outlook for the second half, Hsu said.
“Many of our tier-one customers also confirmed that they have passed the bottom of this business cycle and started to see increasing demand,” Hsu said.
The semiconductor industry would see inventory adjustments continue through the second half before reaching a healthy level at the end of this year, GlobalWafers said.
Memorychip makers would take a couple more quarters to fully digest their inventories, it said.
GlobalWafers said it has gained some market share lately as customers tried to mitigate the impact of global trade disputes by buying wafer supplies from unaffected areas. It expects to benefit from the disputes, as it operates five fabs in Japan and one in South Korea.
During the quarter that ended on June 30, net profit contracted 8.29 percent NT$3.55 billion, from a record NT$3.86 billion in the first quarter. On an annual basis, net profit rose 1.2 percent from NT$3.5 billion.
Earnings per share dropped to NT$8.15 from NT$8.88 a quarter earlier, but were up from NT$8 a year earlier. Gross margin edged lower to 40 percent, compared with 40.8 percent in the first quarter and 40.1 percent a year earlier.
Despite the quarterly decline, profit remained relatively stable, thanks to the firm’s preference for long-term contracts with fixed wafer prices and prepayments.
About 75 percent of its revenue is covered by such contracts, which average three years, it said.
The contract prices are to be flat, or even rise slightly next year, as customers order more advanced wafers, GlobalWafers said.
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