Powerchip Semiconductor Manufacturing Corp (力積電) yesterday said it expects its factory utilization rate to drop by as much as 10 percent this quarter, but is working on reallocating idled capacity to manufacturing power management chips to mitigate an industry slump.
Inventory correction at customers has dealt a heavy blow to three of the chipmaker’s product lines — display driver ICs, specialty DRAM and CMOS image sensors — which made up about 40 percent of its revenue last quarter, the company said.
Some customers have not honored long-term supply agreements to ease mounting inventory pressure, Powerchip said.
Photo: Grace Hung, Taipei Times
Gross margin this quarter is expected to drop to between 40 and 45 percent — which the company considers a “normal average” — from 51 percent last quarter, Powerchip said, attributing it to product mix adjustments.
“We are under heavy pressure to manage [production] of driver IC’s, CMOS image sensors and specialty DRAM chips,” Powerchip president Brian Shieh (謝再居) told an online investors’ conference.
The weakness could lead to a more than 20 percent correction in orders for those chips during the July-September period, with the driver IC business bearing the brunt, Shieh said.
About 70 percent of the chipmaker’s products are covered by long-term supply agreements with customers, with fixed prices, he said.
“Business is slowing in the third and fourth quarters. It is still unclear whether customers’ inventory corrections would persist into the first quarter of next year, or even the second quarter,” he said.
Looking at the brighter side, Shieh said demand for power management ICs for vehicles, chips used in industrial devices and radio-frequency identification (RFID) chips for logistics management systems is still on the increase.
Powerchip said it is facing serious delays in ramping up its new 12-inch fab, dubbed the P5 fab, in Miaoli County’s Tongluo Science Park (銅鑼科學園區) due to an extended lead time for semiconductor manufacturing equipment and a labor shortage.
The chipmaker expects to complete installation of its first production line in the second half of 2024, as construction has been postponed by four to five months.
The production line will have an installed capacity of 19,000 wafers a month.
However, the chipmaker said it is maintaining its forecast capital spending of US$1.5 billion for this year.
The company yesterday reported a 6.04 percent sequential increase in net profit last quarter to NT$7.02 billion (US$234.42 million), from NT$6.62 billion in the first quarter.
Earnings per share (EPS) rose to NT$1.95 last quarter from NT$1.85 in the prior quarter.
First-half net profit soared to NT$13.64 billion from NT$5.47 billion during the same period last year.
EPS jumped to NT$3.8 from NT$1.75.
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