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May 30, 2017

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Q1 sales forecasts mixed for Taiwan IC packaging, testing firms

TAIPEI, Taiwan -- Some of Taiwan's integrated circuit packaging and testing service providers are likely to see a quarterly sales drop in the first quarter of the year due to the slow season effects, according to market analysts.

In the three months, the lowest shipments by these companies are likely to be in February, as the Lunar New Year holiday from Jan. 30 to Feb. 4 means fewer working days that month, analysts said.

However, other companies, particularly in the memory chip packaging and testing sector, could obtain rush orders, which would offset the unfavorable conditions in the first quarter, as demand for mobile devices remains strong, analysts said.

Advanced Semiconductor Engineering Inc. (ASE), the world's largest IC packaging and testing services provider, is expected to see its consolidated sales for the first quarter fall 18-22 percent sequentially, after reporting a quarterly high in its consolidated sales for the fourth quarter of last year, Barclays Capital said in a recent research note.

In the October-December period, ASE's consolidated sales rose 13.1 percent from the previous quarter to a fresh high of NT$64.16 billion (US$2.14 billion).

Analysts said ASE's first quarter sales could also be affected by the relatively high comparison base in the fourth quarter.

ASE is scheduled to release its fourth quarter results at an investor conference on Feb. 7. The market is anticipating that the company will assess the impact of a partial shutdown of one of its plants in Kaohsiung on Dec. 20 due to pollution problems.

Many investors fear that ASE's IC design clients would shift their orders to other service providers to avoid supply disruptions as a result of the ASE plant shutdown.

Siliconware Precision Industries Co. is one of the firms that could benefit from such a shift, analysts said, giving a more upbeat outlook for its first quarter sales.

Taiwanese IC designer MediaTek Inc. has cut its orders to ASE in favor of Siliconware, and such rush orders could help offset the slow season effects, according to local media reports.

In the fourth quarter of last year, Siliconware posted NT$18.84 billion in consolidated sales, the highest in its history, down 1.3 percent from the third quarter. The company has scheduled an investor conference for Jan. 27 to report its full fourth quarter results.

Analysts said Powertech Technology Inc. is one of the memory chip packaging and testing firms that are likely to ride the wave of a booming smartphone market and report stable sales data for the first quarter.

Powertech, which is scheduled to release its full fourth quarter results Feb. 14, reported NT$9.60 billion in consolidated sales for the quarter, up by a quarterly 2.6 percent.

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