High PC-DRAM inventory affecting business, says PTI chairman

Ingrid Lee and Mavis Hong, Taipei; Jessie Shen, DIGITIMES [Thursday 1 November 2012]

The PC-DRAM industry will carry on its inventory correction through the first quarter of 2013, before staging a rebound in the following quarter, according to DK Tsai, chairman of packaging and testing firm Powertech Technology (PTI). Continued high levels of inventory in the supply chain has reflected disappointing PC sales thus far during the traditional peak season.

PTI's revenues for the third quarter of 2012 decreased as expected, due to a slowdown in PC-DRAM orders due to customer inventory corrections, said Tsai. Through demand for mobile DRAM and NAND flash remains brisk, growth in revenues coming from the sectors was offset by falling revenues generated from the PC DRAM segment, Tsai indicated. Such a scenario will continue to negatively affect PTI's operations during the fourth quarter, Tsai said.

In addition, Tsai commented that judging from customers' cautious attitude toward booking inventory, PTI along with other companies in the semiconductor industry will likely face severe challenges in the first quarter of 2013. Order visibility in the industry is currently estimated at about two to three months, compared to the 3-6 months usually seen during the same period in previous years, Tsai noted.

PTI reported consolidated revenues of NT$10.64 billion (US$364 million) for the third quarter of 2012, down 10.6% sequentially. Net profits during the period shrank 50.9% on quarter to NT$773 million, or NT$0.73 a share. The firm posted a 15.1% gross margin in the third quarter, compared to 20.8% in the prior quarter.

Tsai attributed the revenue decline to falling orders for PC DRAM memory, as well as demand for final test services for the products. PTI has seen its customers look to skip the final-test stage to save costs, which led to an only 60% utilization rate for its final-test services in the third quarter, Tsai added.

PTI expects its fourth-quarter revenues to register flat growth, or a slight drop, sequentially, with gross margin staying unchanged.