GreaTek Electronics Inc (超豐) plans to raise prices by double-digit percentage points for new orders to reflect strong demand for its chip packaging and testing services, as well as increasing raw material costs, the company said yesterday.
“Our factory utilization is reaching full. Demand has greatly exceeded what we can supply,” GreaTek president Ning Chien-chao (甯鑑超) told an online investors’ conference. “It may take a period of time to digest the backlog. Supply constraints will remain until the second quarter at least.”
The company said robust consumption of computers, home entertainment gadgets and medical devices fueled demand for its services.
Screen grab from the Powertech Technology Inc Web site
It has also benefited from order relocations due to the US-China trade frictions, it added.
As remote working and online education are likely to stay for a while, GreaTek expects the growth momentum to remain strong this year.
To meet rising demand, GreaTek plans to build two new factories in Miaoli County’s Toufen Township (頭份), which would increase its monthly capacity of 20,000 wafers by 50 percent and generate additional monthly revenue of NT$400 million (US$14.08 million), Ning said.
The company also plans to build a new wafer-level testing fab to offer advanced packaging services, Ning said.
The new fabs are to be completed in June next year at the latest, he said.
“GreaTek has no choice but to hike prices, as raw material costs have been rising. GreaTek will start hiking prices later this quarter by a double-digit percentage point,” said Boris Hsieh (謝永達), chief executive officer of Powertech Technology Inc (力成), the parent company of GreaTek.
GreaTek reported record profit of NT$742 million for last quarter, surging 52.4 percent from NT$487 million a year earlier.
For all of last year, net profit soared 40.4 percent to NT$2.66 billion, from NT$1.9 billion last year. That translated into earnings per share (EPS) of NT$4.68, compared with NT$3.33 in 2019.
Powertech, which provides packaging and testing services primarily for DRAM and NAND flash memory chips, yesterday said its net profit last quarter fell 20 percent to NT$1.66 billion, compared with NT$2.08 billion a year earlier, due to weakness in memory chips used in mobile phones and graphics cards.
Washington’s sanctions on Huawei Technologies Co (華為) reduced Powertech’s revenue in the second half of last year, Powertech chairman D.K. Tsai (蔡篤恭) said.
Without the trade issue, Powertech would have seen revenue rise to more than NT$80 billion last year, rather than the NT$76.18 billion it booked, he said.
Last year as a whole, net profit expanded 14.1 percent to NT$6.66 billion from NT$5.84 billion in 2019. EPS rose from NT$7.52 to NT$8.6.
Powertech expects revenue to drop slightly this quarter from NT$19.02 billion last quarter, due to seasonal weakness and customers’ inventory adjustment, before a rebound in March, Hsieh said.
Powertech said it is undergoing strategic adjustments in its business portfolio by expanding services of chip packaging and testing for logic chips to better manage operational risks.
“Demand from logic chips is so strong and beyond our imagination,” Hsieh said.
Revenue contribution from logic chip packaging services is to reach 50 percent of the company’s overall revenue next quarter, from 30 percent last quarter, the company said.
Powertech aims to boost the revenue share of logic chips to 60 to 70 percent in the long run, Tsai said.
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