Vanguard International Semiconductor Corp (世界先進), a supplier of display driver ICs and power management chips, yesterday said it expects revenue to slump as much as 16 percent sequentially and factory utilization to fall significantly this quarter, as customers, notably flat-panel makers, move to reduce inventory.
Revenue is expected to drop to between NT$12.9 billion and NT$13.3 billion (US$430.1 million and US$443.4 million) this quarter, compared with NT$15.3 billion last quarter, the Hsinchu-based chipmaker told an investors’ earnings conference.
As new orders are falling considerably, Vanguard forecast factory utilization to decline to about 83 percent this quarter.
Photo: Grace Hung, Taipei Times
The factory usage is likely to go down further next quarter, as it expects customers to take two to four quarters to get rid of excess inventory, it said.
To cope with short-term macroeconomic and industrial headwinds, Vanguard trimmed its capital spending for the year to NT$23 billion from an earlier estimate of NT$24 billion, with 70 percent of the budget allocated for the expansion of Fab 5, a newly acquired facility in Hsinchu from panel maker AUO Corp (友達).
“As the world economy is now slowing down for certain, demand in the consumer electronics market is shrinking, Vanguard chairman Fang Leuh (方略) said.
“Customers are adjusting inventory to align with [the downward trend]. We will discuss with customers our mid and near-term capacity buildup to fully match their demand and market conditions as much as possible,” Fang added.
The chipmaker also plans to slow capacity expansions for the Fab 5 by several months. Vanguard plans to ramp up the fab’s monthly capacity to 20,000 wafers by the end of next year, rather than in the first half as planned.
New capacity expansions at its Fab 3 in Singapore and Fab 5 are covered by long-term capacity supply agreements with customers, it said.
“Due to sluggish demand for consumer electronics, customers are aggressively adjusting inventory in the third quarter. Orders are being significantly reduced from the peak. Order visibility has narrowed to about three months,” Vanguard chief operating officer John Wei (尉濟時) told the conference.
Gross margin is forecast to slide to between 44 and 46 percent this quarter, compared with 50 percent last quarter, he said.
However, Vanguard expects average selling prices to remain stable in the second half of the year, as idled capacity due to reduced display driver IC demand would be used to produce better-priced power management chips, it said.
Vanguard yesterday reported record quarterly net profit of NT$4.89 billion for last quarter, soaring 87.8 percent from NT$2.6 billion in the same period last year.
Compared with NT$4.09 billion in the first quarter, net profit expanded 19.4 percent.
Earnings per share rose to NT$2.94 last quarter, from NT$1.58 in the second quarter last year and NT$2.47 in the previous quarter.
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