Hon Precision Industry Inc (鴻勁精密) yesterday said it is upbeat about the growth prospects for the next one-and-a-half years, denying reports that the artificial intelligence (AI) boom would not last long, given weakening demand for advanced packaging technology used in the manufacturing process of AI chips.
Hon Precision primarily supplies test handlers used in advanced packaging of chip-on-wafer-on-substrate (CoWoS) equipment. A majority of CoWoS packaging capacity built by contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電) is used by Nvidia Corp to build its AI chips.
A test handler automates the handling, testing and sorting of semiconductor devices. They are essential for efficient and accurate final testing and packaging processes.
Photo: Lisa Wang, Taipei Times
“Our customers are adjusting their product mixes, but, so far, they have not canceled or pushed behind any orders placed previously. No information from customers indicates such a possibility over the next few months either,” Hon Precision spokesman Colin Weng (翁德奎) said yesterday.
Demand for test handlers has actually been growing rapidly since the third quarter of last year, because of increasing complexity in chip manufacturing processes, resulting in longer testing time and categories, Weng said.
Hon Precision said it should have a holistic picture about overall CoWoS demand, as it gets most orders directly from first-tier customers and outsourced semiconductor assembly and test companies on behalf of their customers.
“We have a six-month order visibility. We have to extend our lead time to cope with strong customer demand,” Weng said. “As customers are showing strong demand [for the company’s equipment], we are optimistic about the business outlook for the third quarter and even for next year.”
In addition to AI chips, Hon Precision expects to see a new growth engine next year from premium mobile phone chips, he said.
As some mobile phone chipmakers are adopting 2-nanometer chips, which are to be packaged using the new wafer-level multi-chip module technology, demand for test handlers embedded with thermal control systems would increase significantly, Weng said.
To cope with rapidly growing demand, Hon Precision plans to build two new buildings, including warehouses and manufacturing facilities, in Taichung adjacent to its headquarters next year, the company said.
The company has leased manufacturing facilities from other companies in response to the sudden increase in orders.
“Demand surged all of a sudden. We did not expect that would happen,” Hon Precision chairman Alan Hsieh (謝旼達) told reporters.
Net profit last quarter soared 1.8-fold from the first quarter of last year to NT$2.57 billion (US$85.6 million), hitting a record high. That translated into earnings per share of NT$15.89.
Gross margin climbed from 55.03 percent last year to 59.09 percent last quarter. Revenue surged 142.35 percent year-on-year to NT$5.91 billion last quarter, setting an all-time high. By segment, AI and high-performance computing accounted for 78 percent of the overall revenue, up 5 percentage points from a year earlier. The automotive segment made up 12 percent, benefiting from strong electric vehicle demand from China. Mobile phones made up 6 percent from 11 percent.
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