Foundry service provider Vanguard International Semiconductor Corp (世界先進) yesterday said it is unable to fully satisfy surging demand for chips used in artificial intelligence (AI) servers and data centers, amid an AI infrastructure investment boom that is crowding out production of less advanced chips.
Vanguard is facing an “undersupply of chips” made using mature process technologies, due to strong demand for AI products and improving demand from customers in the commercial, industrial and auto sectors, which are digesting excess inventory to a healthier level, company chairman Fang Leuh (方略) told a virtual investors’ conference.
However, Vanguard gave a more conservative view on price hikes than its Chinese peers, saying it would discuss with major customers about pricing issues to create a mutually beneficial situation.
Photo: Lisa Wang, Taipei Times
It said increases in new capacity and manufacturing costs should be appropriately reflected in prices, as long as it still aims to reach 30 percent gross margin.
That would help boost Vanguard’s power management chip shipments to grow by a double-digit percentage this year from last year, the chipmaker said.
About 78 percent of the company’s revenue came from power-management chips last quarter.
Vanguard operates five 8-inch fabs to supply less advanced chips and is building a new 12-inch fab in Singapore through VisionPower Semiconductor Manufacturing Co Pte Ltd (VSMC), a joint venture with NXP Semiconductors NV.
Vanguard plans to spend NT$60 billion to NT$70 billion (US$1.9 billion to US$2.22 billion) this year on new facilities and equipment with 85 percent of the amount earmarked for VSMC, similar to last year.
The chipmaker expects the new fab to enter volume production in the first quarter of next year as scheduled.
Vanguard also expects wafer shipments this quarter to grow about 3 percent sequentially, thanks to rising inventory buildup demand for chips used in TVs and e-paper displays.
Unfavorable product mixes would lead to a 3 to 5 percent decline in blended average selling prices, it said, adding that the expiration of some long-term supply agreements signed in 2021 would also drag on prices.
The company has a three-month order visibility on the back of stable customer demand as an inventory correction cycle nears its end, Vanguard president John Wei (尉濟時) said.
That would help lift factory utilization to between 80 and 85 percent this quarter from 75 percent last quarter, he said.
Gross margin this quarter is expected to rise to between 28 and 30 percent, compared with 27.5 percent last quarter, Wei added.
Vanguard reported net quarterly profit growth of 2.6 percent for last quarter to NT$1.75 billion from NT$1.7 billion in the third quarter. On an annual basis, net profit fell 5.4 percent from NT$1.85 billion.
Last year as a whole, net profit grew 12.2 percent to NT$7.91 billion from NT$7.05 billion in 2024, with earning per share rising to NT$4.22 from NT$4.16.
The chipmaker’s board of directors approved a cash dividend distribution proposal of NT$4.5 per share for last year.
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