Vanguard International Semiconductor Corp (世界先進), a supplier of power management chips, yesterday raised its capital expenditure for this year by 70 percent to NT$8.5 billion (US$304.09 million), as it prepared early for next year’s capacity expansion because of longer equipment delivery times.
The Hsinchu-based chipmaker initially planned to spend NT$5 billion on new facilities and equipment this year, up 41 percent from last year’s capital expenditure of NT$3.45 billion.
The upgraded capital spending does not include the purchase of an older fab from AU Optronics Corp (AUO, 友達光電) for NT$905 million, Vanguard said, adding that the fab has a monthly capacity of 40,000 8-inch wafers.
Photo: Grace Hung, Taipei Times
“Constant increases in wafer demand from customers have given us clearer order visibility than in the past. We expect the company’s factory utilization rate to be very high throughout 2021,” Vanguard chairman Fang Leuh (方略) told investors in a teleconference.
“Given the supply-demand imbalance, some customers have booked orders in advance to ensure that our capacity can support them next year,” Fang said.
Asked about the possibility of acquiring a less advanced 6-inch fab, Fang said that the company would clinch a deal as long as the fab has a reasonable price and a good location.
Memorychip maker Macronix International Co (旺宏) is expected to sell a 6-inch fab in Hsinchu.
Vanguard said that its expansion plan aims to address increases in customer demand in the mid to long term, as the chip shortage is expected to extend into next year.
Customers must pay a deposit and prepay to acquire new 8-inch wafer capacity, given the expense of the equipment and the hefty depreciation costs, the chipmaker added.
The prepayments would help safeguard Vanguard’s gross margin and curb increases in depreciation costs, it said.
Much of this year’s capital spending would be used to add 8,000 8-inch wafers per month at a Taoyuan fab later this year and an additional 16,000 wafers per month there in the first half of next year.
For the whole of this year, the chipmaker expects a mild increase in capacity over last year.
Vanguard, which made about 60 percent of its revenue from power management ICs last quarter, yesterday gave positive guidance for this quarter, fueled by resilient demand from display driver ICs used in TVs and PCs.
Revenue this quarter is expected to increase 11 percent sequentially, or up to NT$10.2 billion from NT$9.18 billion last quarter.
The chipmaker based its expectations on a 5 percent price hike from last quarter and a 5 percent increase in capacity, primarily at its Singaporean fab.
Gross margin this quarter is to improve to between 39 percent and 41 percent, from 38.1 percent last quarter, the chipmaker said.
In the January-to-March quarter, Vanguard saw its net profit surge 46.36 percent to NT$2.21 billion from NT$1.55 billion last year. On a quarterly basis, net profit increased 21.43 percent from NT$1.82 billion in the fourth quarter of last year.
Earnings per share climbed to NT$1.34 last quarter, compared with NT$1.1 in the previous quarter and NT$0.89 a year earlier.
Gross margin also improved to 38.1 percent last quarter, up from 31 percent in the same period last year and 37.4 percent three months ago.
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