Chip packaging service provider Powertech Technology Inc (力成科技) yesterday raised its projected capital expenditure for this year by 25 percent to NT$50 billion (US$1.59 billion) to step up capacity buildup for advanced packaging technologies, including panel-level packaging (PLP) for chips used in artificial intelligence (AI) applications.
The additional budget would mainly be used for a new facility that it acquired from flat-panel display maker AUO Corp (友達) for NT$6.9 billion, Powertech said.
“The development of our fan-out PLP technology is going smoothly and equipment installation is on schedule,” Powertech chairman Tsai Du-kung (蔡篤恭) said at an earnings conference. “We are set to enter the product qualification process in the second half of this year in preparation for official shipments by the middle of next year.”
Photo: CNA
Powertech aims to become a supplier of fan-out PLP turnkey solutions, Tsai said.
The first-phase fan-out PLP capacity would be ready by the end of this year, he added.
Tsai declined to confirm whether Advanced Micro Devices Inc and Broadcom Inc are two of its major fan-out PLP customers.
Powertech is also developing advanced co-packaged optics technology by integrating optical engines with AI chips, high bandwidth memory chips or switches, Tsai said.
Mass production is projected to start late next year or in 2028, he said.
An optical engine is a specialized component within transceiver modules or imaging devices that converts electrical signals into light signals and vice versa. The technology is expected to be used in next-generation AI servers.
Powertech’s revenue in the first quarter expanded 37.6 percent year-on-year to NT$21.31 billion.
Revenue is projected to increase in the following quarters, with full-year revenue expected to grow by a double-digit percentage this year from last year, Powertech CEO Boris Hsieh (謝永達) said.
Gross margin is also trending up, thanks to price hikes and an optimal product mix, he said.
In the first quarter, gross margin climbed to the highest in six quarters at 19.4 percent, compared with 17.1 percent a year ago and 18.6 percent in the previous quarter.
Net profit soared 56.9 percent year-on-year to NT$1.84 billion from NT$1.18 billion. On a sequential basis, net profit shrank 1.1 percent from NT$1.86 billion.
The growth is driven by supply constraints in AI, high-performance computing (HPC) and memory chips, and chip packaging and testing services, Hsieh said.
“Market supply-demand conditions are still unstable,” Hsieh said. “We are facing a capacity shortage. Booming AI demand has created a crowding-out effect as it eats up a large portion of capacity. We have to stop providing certain services.”
Equipment utilization rate reached 90 percent for its chip packaging lines and 85 percent for its chip testing lines, Powertech said.
Powertech has hiked prices by up to a double-digit percentage in response to tight capacity and price surges in raw materials and precious metals like gold, it said.
The company would negotiate for further price adjustments, if the price upticks in raw materials persist, it said.
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