Powerchip Semiconductor Manufacturing Corp (力積電), which makes DRAM chips and driver ICs on a contract basis, expects revenue to decline up to 5 percent sequentially this quarter, extending a downtrend from the past three quarters as customers digest excessive inventory.
Although customers remain conservative about placing new orders, they have been more willing to engage in price negotiations, a sign that demand for some applications has started to recover, Powerchip said yesterday.
“We do not expect major changes in the second quarter in terms of revenue,” Powerchip president Brian Shieh (謝再居) told an online investors’ conference. “We believe the first and second quarters will be the trough of this cycle.”
Photo: Grace Hung, Taipei Times
Powerchip expects business to pick up in the second half, Shieh said.
Demand outlook remains bleak this quarter, except some rush orders and insignificant demand for display driver ICs and CMOS image sensors used in smartphone and surveillance devices following two to three quarters of inventory digestion, Powerchip executive vice president Martin Chu (朱憲國) said.
Demand for power management chips is expected to fall further this quarter, as customers entered an inventory correction cycle later than customers in other segments, Chu said.
Factory utilization this quarter might stay below 60 percent, similar to last quarter, the company said.
Last quarter’s utilization rate fell short of the chipmaker’s estimate of 60 to 65 percent.
Powerchip said the lower utilization rate led to high idle capacity costs last quarter and caused gross margin to drop to 18.7 percent, from 34.8 percent in the fourth quarter of last year.
Another drag on its gross margin last quarter was older-generation DRAM chips, the company said.
Gross margin for the chips slipped into negative territory, due to drastic price declines, it said.
The prices are likely to drop mildly this quarter, it added.
Powerchip’s net profit in the first quarter of this year plummeted 90.3 percent to NT$187 million (US$6.13 million) from NT$1.92 billion in the fourth quarter of last year. Earnings per share fell to NT$0.05 from NT$0.48 in the prior quarter.
In response to an investor’s concern about building up new capacity during the downcycle, Powerchip said it does not plan to halt the construction of a new 12-inch factory in Miaoli County’s Tongluo Science Park (銅鑼科學園區).
Powerchip plans to spend NT$1.89 billion on new facilities and manufacturing equipment this year, mostly for the new fab.
The chipmaker expects manufacturing equipment to be installed by the end of this year, allowing it to begin producing chips by early next year.
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