Vanguard International Semiconductor Corp (世界先進), a supplier of display driver ICs and power management chips, yesterday said it is accelerating capacity expansion by budgeting a record NT$24 billion (US$861.88 million) capital expenditure for this year in its efforts to address a chip crunch.
Most of the money is to be spent to produce 20,000 8-inch wafers at a manufacturing facility, dubbed Fab 5, acquired last year, while 20 percent is to boost its Fab 3 to full capacity,Vanguard said.
Overall, it expects to add 9 percent to its existing capacity by the end of this year, as Fab 5 will not contribute any capacity until the first half of next year, the company said.
Photo: Grace Hung, Taipei Times
The Hsinchu-based chipmaker overspent on new manufacturing equipment last year, investing NT$9.5 billion, as it moved forward its schedule to to catch up with demand for power management and vehicle chips, it said.
It initially planned to spend between NT$8 billion and NT$9 billion on new manufacturing equipment last year, it said.
“We are focusing on technologies for power management ICs, and automotive and high-voltage panel driver ICs,” Vanguard chairman and president Fang Leuh (方略) told an investors’ teleconference. “For the time being, customers have been showing very strong demand.”
“Our factories have been fully loaded for six consecutive quarters, underpinned by customers’ long-term supply agreements,” Fang said, adding that the growth momentum might extend into the second half of this year.
Gross margin might grow further, he said.
Addressing investors’ concerns over competition from operators of 12-inch factories, Fang said that Vanguard does not expect significant losses of orders any time soon given the optimal production and cost efficiency of its 8-inch factories.
Besides, most peripheral chips to support 5G applications and vehicles are made at 8-inch factories, he said.
Vehicle chips might contribute a double-digit percentage to the company’s revenue next year from a single digits now, Vanguard chief operating officer John Wei (尉濟時) said.
It would be sensible for the company to build a 12-inch factory, Fang said.
It is evaluating the feasibility of building one, most likely in Taiwan, he said.
Vanguard has three 8-inch factories.
In the short term, order visibility remains robust this quarter, Fang said.
Demand for 0.18-micron process technology to produce power management chips and vehicle chips would grow from last year, he said.
Revenue is expected to expand between 3.6 percent and 6.75 percent to between NT$13.2 billion and NT$13.6 billion this quarter from NT$12.74 billion last quarter, Fang said.
Vanguard attributed the growth mostly to price hikes.
Gross margin is to be between 47 and 49 percent this quarter from 47.6 percent last quarter, Fang said.
Net profit more than doubled to NT$3.72 billion last quarter, compared with NT$1.82 billion in the fourth quarter of 2020, and rose quarterly by 13 percent from NT$3.29 billion.
Earnings per share rose to NT$2.25 last quarter from NT$1.1 in the same period a year earlier and NT$1.99 in the third quarter last year.
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