• Sat
  • Aug 30, 2014
  • Updated: 8:12am
BusinessChina Business
TECHNOLOGY

Chipmaker ASMC sees near-term industry weakness

Chipmaker calls for caution amid sluggish spending and weak consumer confidence

PUBLISHED : Thursday, 08 August, 2013, 12:00am
UPDATED : Thursday, 08 August, 2013, 3:50am

Advanced Semiconductor Manufacturing Corp (ASMC), which saw a sharp fall in net profit in the first half, predicts slower growth for the industry this year owing to weakness in the global economy.

ASMC president Wang Qingyu said the global semiconductor market was beset by "limited visibility" caused by "slow consumer spending and the lack of consumer confidence", according to a filing with the Hong Kong stock exchange yesterday.

"During the first half of this year, the major economies continued to see weak recovery while the Chinese economy showed clear signs of a slowdown," Wang said.

"As a result, the company is taking a cautious approach to its business operations and financial performance in the near term."

Shanghai-based ASMC, which operates two wafer-fabrication plants on the mainland, reported an 86 per cent decrease in net profit to 3.5 million yuan (HK$4.4 million) in the six months to June.

Wang attributed that decline to the typical slow season in the early part of the year, prolonged annual maintenance shutdowns of its factories and "an inventory correction in the semiconductor supply chain".

"Internally, the company's major customers are not keen on building up their inventories," Wang said.

However, he added that orders had improved in the second quarter.

Revenue tumbled 18 per cent to 366.8 million yuan in the first half from 448.8 million yuan the previous year, while research and development expenses jumped 28 per cent to 18.7 million yuan.

Primary customers are the so-called "fabless" semiconductor companies, which design chips and outsource its fabrication to semiconductor foundries like ASMC.

In the three months to June, 49 per cent of ASMC's sales were to the United States, 29 per cent to Asia-Pacific and 22 per cent to Europe.

Wang's call for caution goes against recent positive forecasts for the semiconductor industry. Market research firm IDC last month estimated the global chip market would record a 6.9 per cent increase in revenue to US$320 billion this year.

Shares of ASMC slipped 1.43 per cent to close at 34.5 HK cents yesterday.

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