Powerchip Semiconductor Manufacturing Corp (力積電), which primarily makes display driver ICs and power management ICs, yesterday gave a positive outlook for the next few years as most of its capacity has been booked at higher prices amid an ongoing chip crunch.
Powerchip expects the latest semiconductor industry boom to last two to three years, as it has clinched long-term contracts to supply logic and memory chips at fixed prices and shipments, company president Brian Shieh (謝再居) told a media briefing in Taipei.
About 80 percent of Powerchip’s capacity has been booked through long-term supply contracts, which take effect next year. This is the first time Powerchip has obtained long-term supply contracts.
Photo: Grace Hung, Taipei Times
“To satisfy customer demand, we are increasing capacity and output by adding new manufacturing equipment to existing fabs, but the increase is minimal,” Shieh said.
The company’s earnings per share (EPS) this year could climb to more than NT$4, benefiting from strong customer demand and price hikes, he said.
Powerchip earned NT$9.89 billion (US$355.22 million) in net profit, or EPS of NT$3.07, in the first three quarters of this year, compared with NT$2.72 billion, or NT$0.88 per share, one year ago.
“As we have raised prices over the past few quarters, we expect the fourth-quarter performance will be better than the third quarter,” Shieh said.
Powerchip reported a gradual improvement in gross margin to 44 percent last quarter, compared with 39.53 percent in the second quarter, Shieh said, adding that the chipmaker expects gross margin would be even higher this quarter, possibly surpassing 40 percent.
Powerchip said that display driver ICs, which contributed 20 percent of the company’s revenue last quarter, had the highest gross margin due to tight supply. That was followed by power management ICs, which made up 20 percent of revenue.
Powerchip operates two 8-inch fabs and three 12-inch fabs in Taiwan. It is building a new 12-inch fab in Miaoli County’s Tongluo Science Park (銅鑼科學園區), which is slated to start operations in the second half of 2023.
To further fuel growth, the chipmaker has outlined major growth strategies. One is developing new indium gallium zinc oxide technology to manufacture driver ICs for high-resolution augmented reality and virtual reality devices to make inroads into the metaverse market, Powerchip chairman Frank Huang (黃崇仁) said yesterday.
Powerchip is also investing in auto chips using new materials such as gallium nitride and silicon carbide, to expand capacity for power management ICs for vehicles, especially electric vehicles, Huang said.
“The auto chip market is enormous, as the consumption of chips in electric vehicles is several times higher than gasoline-powered cars,” Huang said.
Auto chips comprised about 10 percent of Powerchip’s revenue last quarter.
Huang expects the chip shortage to continue due to scant capacity for 40-nanometer and 0.11-micron chips worldwide.
The company yesterday also reported NT$6.04 billion in revenue for last month, soaring 52.43 percent from NT$3.96 billion a year earlier. In the first 10 months, revenue expanded 35.65 percent year-on-year to NT$45.86 billion from NT$33.81 billion.
Powerchip is to debut its share on the Taiwan Stock Exchange early next month.
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