Sat, Mar 23, 2024 page12

• Vanguard forecasting revenue growth

  MILD RECOVERY EXPECTED: Vanguard, a heavy consumer of electricity, said its utility costs would increase 10 to 12 percent this year due to higher electricity fees

  • By Lisa Wang / Staff reporter
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  Vanguard International Semiconductor Corp (世界先進), a contract chipmaker focused on making power management chips and drive ICs for displays, yesterday reaffirmed its view that revenue would return to growth this year, as negative impacts of high inflation, economic uncertainty, geopolitical frictions and a supply chain inventory glut lessen.

  Last year, the chipmaker’s revenue plunged 26 percent year-on-year to NT$38.27 billion (US$1.2 billion), the lowest in four years, as demand faltered due to customers’ drastic inventory adjustments.

  “Our company is expecting a mild recovery for the full year of 2024,” Vanguard chairman Fang Leuh (方略) told reporters at a media gathering in Taipei. “Consumer electronics are gradually returning to seasonal growth patterns this year following drastic inventory corrections starting from the second half of 2022.”

  

  Vanguard International Semiconductor Corp’s logo is pictured at its headquarters in the Hsinchu Science Park on Feb. 8, 2018.

  Photo: Grace Hung, Taipei Times

  Customers from industrial and vehicle manufacturing segments are still striving to reduce excessive inventory, Fang said.

  It might take one to two more quarters for them to reduce inventory to healthy levels, he said.

  Vanguard has attracted more new customers intensifying their efforts to boost supply resilience amid geopolitical tensions, he said.

  The chipmaker said it expects more orders next year and in 2026.

  A majority of new orders are for power management chips used in consumer electronics, notebook computers and servers, it said.

  Vanguard said based on the latest developments and customers’ inventory reduction progress, its first-quarter targets are achievable.

  It expects wafer shipments this quarter to drop 6 percent to 8 percent sequentially due to seasonal weakness, the chipmaker said, adding that the average selling price would be flat.

  This year, revenue might expand a high-single-digit percentage or a low-double-digit percentage, the Hsinchu-based chipmaker projected last month.

  It is diligently looking at potential investment in a new 12-inch fab as it expects capacity scarcity in the long term, Vanguard said.

  The company is operating five 8-inch fabs, including one located in Singapore.

  As there is a slim chance of Vanguard investing in the US and Europe due to expensive manufacturing costs and work culture differences, Singapore has been singled out by analysts as an optimal location because of its readiness to embrace more foundry fabs.

  However, Vanguard did not give further details about its 12-inch fab investment.

  Operational costs of a 12-inch fab in Singapore are estimated to be 20 percent to 30 percent higher than in Taiwan, an industry source said.

  The US is the most expensive destination with costs two to three times higher than Taiwan, the source said.

  Europe and Japan came next with about 50 percent higher costs than Taiwan, they said.

  Following the latest electricity rate hikes in Taiwan, Vanguard said that its utility costs would increase 10 to 12 percent this year as the company consumes electricity heavily and is to pay 15 percent higher electricity rates from next month.

  That might lead to an increase in its electricity bill this year ranging from NT$200 million to NT$300 million, it said.

  The increase would erode gross margin by 0.5 percent to 1 percent this year, it said.

  It would discuss with customers whether to reflect the increases in utility costs in its prices, the chipmaker added.
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