Profit of Powertech Drops by 19 Percent
Powertech Technology Inc, a chip testing and packaging services provider, reported a 19% decrease in net profit for the last quarter, amounting to NT$1.28 billion. This significant drop in profit was primarily due to NT$670 million in foreign exchange losses caused by a 10% appreciation of the New Taiwan dollar against the US dollar.
Despite the financial setback, Powertech remains optimistic about revenue growth in the third quarter of 2022 and for the rest of the year. Powertech's chief executive officer, Boris Hsieh, expects the company's revenue this year to be little changed from last year's NT$73.7 billion.
In the logic chip packaging and testing sectors, Powertech is seeing benefits from rising demand as customers shift orders out of China, along with growing demand for power modules. This trend is expected to continue, with Powertech anticipating increased demand for DRAM chip packaging and testing services in the second half of this year, driven by customers' inventory replenishment and the launch of new devices.
Powertech's strategic investments in advanced FOPLP technology are also set to pay off next year. The company has already made significant breakthroughs toward the commercialization of this technology and expects the non-recurring engineering revenue from its FOPLP technology to stand at US$10 million a month from the second half of next year, potentially doubling to US$20 million a month in 2027.
However, the rapid appreciation of the NT dollar has posed a challenge for Powertech. According to Powertech chairman Tsai Du-kung, the appreciation erased NT$452 million in net profit and NT$0.61 in EPS. If the NT dollar hovers at the NT$29.5 level, Powertech expects net profit and gross margin to return to their normal performance. Every 1% appreciation in the NT dollar would reduce gross margin by 0.6%, according to Powertech financial officer Huck Shen.
In response to these challenges, Powertech has increased its capital expenditures to NT$19 billion for this year, from its original budget of NT$15 billion. This increased investment is a testament to Powertech's commitment to its long-term growth strategies.
In an earnings conference, Powertech Technology Inc provided these updates on its financial performance and future outlook. The company continues to navigate financial challenges while staying focused on its strategic goals, particularly in the areas of advanced FOPLP technology and capital expenditures.
Given the financial challenges faced by Powertech Technology Inc due to foreign exchange losses, the company is anticipating revenue growth in the technology sector, specifically in the logic chip packaging and testing sectors. Despite the rapid appreciation of the NT dollar, Powertech's strategic investments in advanced FOPLP technology are expected to increase revenue, particularly from the second half of next year, with non-recurring engineering revenue from its FOPLP technology potentially standing at $10 million a month. Additionally, Powertech's increased capital expenditures this year, reaching NT$19 billion, underscore its commitment to its long-term growth strategies in the technology and finance industries.
