Powertech Technology Inc (力成科技) yesterday reported that net profit last quarter plunged 49 percent year-on-year due to a longer-than-expected inventory correction cycle, but that it expects business to recover later in the year.
Net income fell to NT$1.13 billion (US$36.8 million) from NT$2.2 billion a year earlier and slid 16.5 percent from NT$1.35 billion in the previous quarter, the chip testing and packaging service provider said.
Gross margin declined to 16.1 percent last quarter from 22 percent a year earlier and 17.2 percent in the prior quarter, it added.
Photo: Grace Hung, Taipei Times
“The inventory adjustment lasted longer than we expected,” Powertech chairman Tsai Du-kung (蔡篤恭) told investors.
“We thought the inventory adjustment cycle would end soon, but it was dragged down by a slower-than-expected recovery in the Chinese market and political factors,” he added.
The memorychip industry was hit hard because of its overreliance on the Chinese market, Tsai said.
However, capacity reductions by the world’s major memory chipmakers, including Samsung Electronics Co and SK Hynix Inc, should have a positive effect on the industry, he added.
Demand remains fragile this quarter, although there were sporadic signs of a pickup in the TV, Wi-Fi and networking segments, the company said.
Powertech retained its forecast that revenue would increase at a quarterly pace for the remainder of this year.
The automotive and industrial segments have been growing over the past quarters and would continue to expand this quarter, it said.
To cope with rising demand for those applications, Powertech is expanding capacity in Japan through its subsidiaries Tera Probe Inc and TeraPower Technology Inc.
“The second quarter would be better than the first quarter,” Powertech chief executive officer Boris Hsieh (謝永達) said. “The first quarter would be the trough as we expected.”
The company expects to benefit from the rising popularity of ChatGPT, as demand for servers to support artificial intelligence applications would increase and lead to growth in memory chip demand, Hsieh said.
Powertech said it has proposed a new issue of up to 75.9 million shares to fund potential merger-and-acquisition (M&A) deals abroad, as customers urge the company to diversify its manufacturing sites amid rising tensions between Taiwan and China.
“We believe it would be feasible to purchase an older plant overseas to align with customers’ ‘Taiwan+’ supply chain strategy. It is extremely difficult and not financially viable to build an overseas fab that is capable of offering advanced technologies like those in Taiwan,” Tsai said.
Powertech does not have any M&A targets at the moment, he said.
The company said it plans to raise its cash dividend payout ratio next year as it has abundant cash on hand at NT$18.49 billion and a lower debt ratio of 41 percent, Tsai said.
Powertech has proposed distributing a cash dividend of NT$7 per share for this year, which translates into a payout ratio of about 60 percent based on its earnings per share of NT$11.6 last year.
To cope with sluggish customer demand, Powertech’s capital expenditure would be about 40 percent lower than last year’s NT$16 billion, it said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) would not produce its most advanced technologies in the US next year, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the comment during an appearance at the legislature, hours after the chipmaker announced that it would invest an additional US$100 billion to expand its manufacturing operations in the US. Asked by Taiwan People’s Party Legislator-at-large Chang Chi-kai (張啟楷) if TSMC would allow its most advanced technologies, the yet-to-be-released 2-nanometer and 1.6-nanometer processes, to go to the US in the near term, Kuo denied it. TSMC recently opened its first US factory, which produces 4-nanometer
GREAT SUCCESS: Republican Senator Todd Young expressed surprise at Trump’s comments and said he expects the administration to keep the program running US lawmakers who helped secure billions of dollars in subsidies for domestic semiconductor manufacturing rejected US President Donald Trump’s call to revoke the 2022 CHIPS and Science Act, signaling that any repeal effort in the US Congress would fall short. US Senate Minority Leader Chuck Schumer, who negotiated the law, on Wednesday said that Trump’s demand would fail, while a top Republican proponent, US Senator Todd Young, expressed surprise at the president’s comments and said he expects the administration to keep the program running. The CHIPS Act is “essential for America leading the world in tech, leading the world in AI [artificial
REACTIONS: While most analysts were positive about TSMC’s investment, one said the US expansion could disrupt the company’s supply-demand balance Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) new US$100 billion investment in the US would exert a positive effect on the chipmaker’s revenue in the medium term on the back of booming artificial intelligence (AI) chip demand from US chip designers, an International Data Corp (IDC) analyst said yesterday. “This is good for TSMC in terms of business expansion, as its major clients for advanced chips are US chip designers,” IDC senior semiconductor research manager Galen Zeng (曾冠瑋) said by telephone yesterday. “Besides, those US companies all consider supply chain resilience a business imperative,” Zeng said. That meant local supply would
Servers that might contain artificial intelligence (AI)-powering Nvidia Corp chips shipped from the US to Singapore ended up in Malaysia, but their actual final destination remains a mystery, Singaporean Minister for Home Affairs and Law K Shanmugam said yesterday. The US is cracking down on exports of advanced semiconductors to China, seeking to retain a competitive edge over the technology. However, Bloomberg News reported in late January that US officials were probing whether Chinese AI firm DeepSeek (深度求索) bought advanced Nvidia semiconductors through third parties in Singapore, skirting Washington’s restrictions. Shanmugam said the route of the chips emerged in the course of an
RSS