Advanced Semiconductor Engineering (ASE), the world’s largest chip packaging and testing company, expects its first-quarter shipments to decrease 12-15% sequentially due to seasonal factors, as well as a partial shutdown of its K7 plant accused of polluting a river.
Demand for system-in-package (SiP) packaging has slowed down since the first quarter as the consumer electronics industry enters the traditional off-season, according to ASE CFO Joseph Tung.
In addition, ASE has seen some of its customers adjust orders due to the partial closure of its K7 plant, which would affect 4-5% of the total revenues generated from the company’s core IC ATM (assembly testtest is test and material) business during the quarter, Tung said. However, ASE recognizes the transfer of orders as a short-term event.
Work at wafer-level processes of ASE’s A7 plant in Kaohsiung, southern Taiwan has been suspended due to improper disposal of wastewater. The incident will be settled within one quarter, and will not affect the company’s performance during the second half of 2014, ASE COO Wu Tien-yu noted.
As for ASE’s EMS business, revenues are projected to fall about 30% sequentially in the first quarter of 2014 due to a seasonal slowdown in demand, Tung indicated. However, revenues generated from the segment are set to rebound in the second quarter, Tung said.
ASE’s overall operations are expected to register sequential growth in revenues and profits through the fourth quarter of 2014, similar to the pattern in 2013, according to Tung.
Revenues of ASE’s IC ATM business slipped 4% on quarter to NT$28.7 billion (US$947.5 million) in the fourth quarter of 2013, while its EMS sector enjoyed a 45% sequential increase. Consolidated revenues for the quarter rose 13% on quarter to NT$64.16 billion.
ASE generated net profits of NT$5.82 billion in the fourth quarter of 2013, up 31% on quarter. EPS for the quarter came to NT$0.73.
ASE guided its consolidated revenues will drop about 20% sequentially in the first quarter of 2014. Gross margin for the quarter will slide to 17-18% as a result of lower revenues.
