Contract chipmaker Vanguard International Semiconductor Corp (世界先進) yesterday said that it plans to allocate 41.2 percent more capital expenditure to expand capacity this year as demand has greatly surpassed its capacity amid a stay-at-home trend.
The Hsinchu-based chipmaker plans to spend NT$5 billion (US$176.14 million) on new facilities and equipment to mitigate the supply crunch, up from NT$3.54 billion last year.
Based on its expenditure plan, the chipmaker’s most-requested 0.18-micron and 0.25-micron technology capacity would increase by a combined 20 percent from last year, Vanguard said.
Photo: Grace Hung, Taipei Times
Part of the spending would be to expand automotive chips, which make up less than 10 percent of its total shipments, Vanguard said.
“Demand for semiconductors is very strong this year,” Vanguard chairman Fang Leuh (方略) told investors at a teleconference. “The demand momentum is to last for two to three quarters at least before taking a pause.”
Some customers have booked orders for third-quarter shipments, Fang said.
Vanguard said that it has clear order visibility and expects factory utilization rate to remain “quite high” in the first half of this year, thanks to rising demand.
The equipment loading rate has risen to 100 percent from 95 percent last quarter, it said.
Vanguard is exploring ways to expand its 8-inch wafer capacity, including via acquisitions, as it is unable to fully satisfy demand, it said.
The company in 2019 purchased an 8-inch fab from GlobalFoundries Inc for US$236 million.
For this year, Vanguard expects shipments of power management ICs to outgrow flat-panel driver ICs.
It expects a double-digit percent annual growth rate for its power management ICs, which contributed 56 percent to the company’s revenue last quarter, Vanguard said.
As chip supply tightens, Vanguard has hiked prices for new orders by about 5 percent this quarter, due to higher manufacturing costs, it said.
Revenue is to climb to a new high of NT$8.9 billion to NT$9.3 billion this quarter, which would be quarterly growth of 2.06 to 6.76 percent from NT$8.72 billion last quarter, it said.
Gross margin is to remain between 36.5 and 38.5 percent this quarter, compared with 37.4 percent last quarter, it said.
The company’s goal is to lift its gross margin to 40 percent, Vanguard said, without providing a timeframe.
Net profit last quarter jumped 21.6 percent to NT$1.82 billion, compared with NT$1.5 billion in the same period of 2019.
Last year as a whole, net profit rose 7.6 percent to NT$6.31 billion from NT$5.87 billion in 2019, or earnings per share of NT$3.81, up from NT$3.54 a year earlier.
The firm’s board of directors on Monday approved a cash dividend distribution of NT$3.5 per common share, representing a payout ratio of 92 percent.
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