Advanced Semiconductor Engineering Inc (ASE, ??????), the world’s biggest chip packager and tester, said quarter-on-quarter net profit shrank 19 percent last quarter due to a slower-than-expected pickup in the communications segment.

On a consolidated basis, net profit declined to NT$6.34 billion (US$209 million) from NT$ 7.85 billion in the second quarter, ASE said.

Gross margin inched up to 18.7 percent form 18.4 percent, thanks to higher factory utilization, it said.

The Kaohsiung-based company expects to see a steady fourth-quarter as revenue and gross margin from its core chip testing and packaging businesses are to retain last quarter’s levels. The core business revenue grew 7 percent to NT$41.85 billion last quarter, while gross margin improved to 25.1 percent from 23.1 percent.

At an investors’ conference on Friday, ASE said the demand situation is expected to be healthy in the fourth quarter, citing potential “pent up” demand in the market at year’s end despite uncertainties in terms of new product introductions and channel sales.

“The fourth quarter, based on our forecast, will be very similar to what we saw in the third quarter,” ASE chief finance officer Joseph Tung (???) said. He declined to comment on whether the upside growth would be attributable to efforts to ease the bottleneck in the chip manufacturing supply chain.

Tung said the company’s factory utilization for this quarter would also be similar to last quarter’s, from around 75 percent to almost 90 percent.

Given that seasonal fluctuation appears more muted this year, “there is the possibility that we may have a smaller impact from seasonality in the first quarter [of next year],” Tung said.

The first quarters are usually a slack season for semiconductor companies, including ASE.

Commenting on the company’s system-in-package (SiP) business, Tung said the company is satisfied with the expected decent growth from the business this year, as the company’s efforts to optimize the SiP product portfolio bears fruit.

ASE is a SiP service provider for Apple Inc’s new iPhone devices and Apple Watch. The SiP business accounted for about 17 percent of ASE’s revenue last quarter.

The company remains confident regarding the growth potential of the SiP business, as it is expected to receive more orders and make more improvement in its profit structure next year, Tung said.

ASE also said its NT$128.7 billion acquisition of local rival Siliconware Precision Industries Co (????) has entered a third-phase review in China, after resubmitting its application and required documents to the Chinese Ministry of Commerce in June.

Meanwhile, Winbond Electronics Corp (????) on Friday reported the highest quarterly net profit in 17 years for last quarter at NT$2.08 billion, benefiting from ongoing supply constraints in memory chips and price upticks.

Windbond’s last quarter figures almost doubled from NT$1.09 billion in the second quarter. On an annual basis, it surged 2.15 times from NT$660 million, the company’s financial statements submitted to the Taiwan Stock Exchange showed.

The company’s gross margin improved to 36.89 percent from 29 percent in the previous quarter, it said.

By: DocMemory
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