Powerchip Semiconductor Manufacturing Corp (力積電) yesterday said its revenue would likely dip 15 percent this quarter, as it expects a second consecutive quarterly decline in revenue amid sluggish demand for chips used in PCs and consumer electronics.
The forecast came after the DRAM foundry service provider last quarter posted a 25 percent quarter-on-quarter drop in revenue.
Powerchip said that market conditions worsened last quarter as demand weakness spread to power management chips, after driver ICs and CMOS image sensors used in mobile phones and PCs previously began to be affected by customers’ plans to reduce excessive inventory.
As demand remains gloomy, the company’s factory utilization would drop to about 60 percent this quarter from 70 percent last quarter, Powerchip president Brian Shieh (謝再居) told an online investors’ conference.
As the prices of standard DRAM chips have plunged to levels near their production costs, Powerchip would not utilize its idle capacity to produce those memory chips, Shieh said.
Standard DRAM chips are the biggest revenue contributor to Powerchip, accounting for 29 percent last quarter.
To increase its capacity utilization, Powerchip said it has scrapped a quota limitation and has given customers with long-term supply agreements a one-year grace period to delay chip deliveries, Shieh said.
“We are seeing some positive signs on the market,” Shieh said. “Customers have improved their inventory in the fourth quarter and will see a distinct reduction in the first quarter.”
As a result, revenue in the second quarter of this year would stabilize, setting the scene for a rebound in the second half of the year, Shieh said.
The company has received some rush orders for display driver ICs and memory chips from customers, a budding indication of recovery, Shieh said.
Demand for power management chips used in vehicles and industrial devices, as well as radio frequency identification chips, is improving, he said.
Powerchip said the construction of a new 12-inch factory in Miaoli County’s Tongluo Science Park (銅鑼科學園區) has been delayed due to longer equipment delivery lead times.
The delays led to a 22 percent dip in capital spending last year to NT$650 million (US$21.4 million), the company said, adding that it had planned to spend US$840 million.
This year, Powerchip’s capital spending budget would rise to US$1.84 billion, as it is installing new manufacturing equipment at the new fab, the company said, adding that it aims to start test production by the end of this year.
The new fab would insure as much as NT$2 billion of depreciation costs this year, the firm said.
Last quarter, revenue plunged 25 percent quarterly to NT$14.36 billion, from NT$19.18 billion in the third quarter of last year, attributable to the holiday season and rising economic uncertainty after China relaxed its COVID-19 controls.
Powerchip’s net income declined to NT$1.92 billion, down 68 percent from NT$6.07 billion in the previous quarter and down 69 percent from NT$6.2 billion in the same period in 2021.
For last year as a whole, Powerchip’s net profits expanded 34 percent to NT$21.64 billion from NT$16.09 billion in 2021. Earnings per share jumped to NT$5.8 from NT$4.92.
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