Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電) expects significant improvement in gross margin and net profit this quarter on continued chip price hikes.
The company has raised prices for 12-inch display driver chips by 30 percent, image sensors by 20 percent and 8-inch display driver chips by 15 percent since January due to short supply, Powerchip president Martin Chu (朱憲國) said at an earnings conference on Tuesday.
“Such significant price hikes would boost the company’s business by a double-digit percentage,” Chu said, projecting a “jump” in gross margin and net profit this quarter.
Photo: Grace Hung, Taipei Times
The memory supply crunch is expected to persist through the second half of this year at least, as launches of token-intensive artificial intelligence (AI) large language models, such as OpenClaw, are fueling demand for memory chips, he said.
Foundry services for memory chips, including DRAM and flash memory, accounted for 44 percent of the company’s revenue last quarter, while foundry services for power management chips and display driver chips made up 18 percent and 10 percent respectively, Powerchip said.
Thanks to massive asset disposal gains from selling a 12-inch fab to Micron Technology Inc, last quarter marked Powerchip’s first profitable quarter in the past nine quarters.
Net profit was NT$14.2 billion (US$450.2 million) last quarter, compared with a loss of NT$654 million in the previous quarter and a loss of NT$1.1 billion a year earlier, while gross margin improved to 10 percent from 6 percent in the previous quarter and minus-5 percent the previous year.
“Powerchip has entered a positive cycle. We are optimistic about our business outlook,” company spokesman Eric Tan (譚仲民) said at the conference.
The company’s factory utilization rate is forecast to move up to 100 percent this quarter, from about 88 percent last quarter, Tan said.
Powerchip this year plans US$512 million in capital expenditures in preparation for volume production of DRAM chips in the second half of 2028, the company said.
It would use new DRAM manufacturing process technology — called 1P — transferred from Micron for the production, it said.
The company would also provide advanced packaging services for the high-bandwidth memory (HBM) chips made by Micron, which has prepaid US$300 million to Powerchip for equipment purchases, it said.
HBM chips play an essential role in enhancing AI computing.
Powerchip is also collaborating with customers to supply integrated passive devices (IPDs) using advanced packaging technology from the second half of next year, the company said.
IPD integrates resistors, capacitors and inductors into a single substrate, suitable for 5G smartphones and high-performance computing devices, it said.
The advanced packaging technology — called embedded multi-die interconnect bridge — was developed by Intel Corp and viewed as an alternative to the chip-on-wafer-on-substrate technology developed by Taiwan Semiconductor Manufacturing Co (台積電) amid a prolonged supply crunch.
Powerchip aims to boost its new 3D AI foundry business that includes IPD, interposers for 2.5D packaging technology and 3D packaging wafer-on-wafer, Chu said.
The new business is to become a third pillar of Powerchip’s revenue growth engines within two to three years, in addition to the memory chip and logic chip foundry services, he said.
The new 3D AI foundry business accounted for about 3 percent of the company’s revenue last quarter, he added.
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