Chip testing and packaging services provider Powertech Technology Inc (力成科技) yesterday said it expects a significant pickup in the second quarter of this year on recovering demand from the DRAM segment, after reporting its weakest earnings in six quarters last quarter.
The Hsinchu-based company said the first quarter would be the bottom of the current downcycle, with revenue expected to improve from the second quarter.
“The business pattern this year will be very different from what the company experienced last year, when the company reported strong results in the first half, but saw weakening performance in the second half due to the industry’s inventory correction,” Powertech chairman Tsai Du-kung (蔡篤恭) told an earnings conference.
Photo: Grace Hung, Taipei Times
Powertech expects to see a significant recovery next quarter mainly from its DRAM business as a major US customer has placed substantial orders, Powertech chief executive Boris Hsieh (謝永達) said.
DRAM demand would rise in the second half of the year with the introduction of new edge devices such as computers and smartphones equipped with artificial intelligence (AI) functions, which consume more DRAM and NAND flash memory chips, Hsieh said.
Hsieh expects revenue contribution from AI-related businesses to rise further this year. AI-related businesses made up 8 percent of the company’s total revenue last quarter, up from 4 percent in the first quarter of last year when the new business started contributing revenue.
To harness the strong growth opportunities from the AI boom, Powertech is deploying advanced chip packaging capacity, including chip-on-wafer, 2.5-dimensionIC, 3-dimensionIC packaging, and other products, the company said.
Powertech’s chip-on-wafer packaging service is targeting system companies, rather than foundry companies such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Tsai said.
TSMC has outsourced some chip-on-wafer orders to local chip packagers such as Siliconware Precision Industries Co (矽品精密) to mitigate capacity constraints.
The company plans to allocate NT$15 billion (US$457.8 million) for capital expenditure this year, up about 15 percent from NT$13 billion last year.
During the fourth quarter last year, the company’s net profit plummeted 55.7 percent year-on-year to NT$1.93 billion, supported by a disposal gain of NT$3.57 billion from selling one of its Chinese plants. On a sequential basis, net profit dipped 10.5 percent from NT$2.15 billion.
Last year as a whole, Powertech posted net profit of NT$8.5 billion, down 10.6 percent from NT$9.51 billion in 2023. Earnings per share fell to NT$9.09 from NT$10.72.
The company has proposed distributing a cash dividend of NT$7 per share, the same as last year, suggesting a payout ratio of 77 percent.
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