Powertech expects net profit to rise from last quarter

• By Lisa Wang / Staff reporter

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Chip packaging service provider Powertech Technology Inc (力成科技) expects net profit this quarter to rise from last quarter’s NT$2.61 billion (US$80.43 million), driven by cost-driven price increases and memorychip shortages amid the artificial intelligence (AI) boom.

“As market supply remains tight relative to demand, customers have shown a high degree of acceptance toward price adjustments driven by rising raw material costs,” Powertech chief executive officer Boris Hsieh (謝永達) told an online investors’ conference yesterday.

“For the fourth quarter, profitability is expected to climb further, bolstered by high production utilization and price adjustments,” Hsieh said.

Powertech Technology Inc chairman Tsai Du-kung poses for a photograph at a company factory at Hsinchu Science Park on Aug. 26.

Photo: CNA

The company plans to increase prices by a single-to-double-digit percentage this quarter amid surging costs for substrates and other semiconductor components, coupled with a persistent DRAM and NAND flash memorychip supply crunch, he said.

Last quarter’s net profit rose 17.7 percent from NT$2.22 billion a quarter earlier and surged 70 percent annually from NT$1.54 billion, beating the company’s estimate, Powertech said.

Net profit in the first three quarters totaled NT$6.68 billion, eclipsing the company’s full-year profit of NT$5.54 billion last year, with earnings per share (EPS) climbing to NT$9.05 in the first nine months, exceeding EPS of NT$7.48 for the whole of last year, it said.

Powertech’s overall revenue this year is set to beat its 2022 peak of NT$83.9 billion, the company said.

While the memory shortage is expected to ease next year, supply will still lag behind demand until major chipmakers ramp up new plants, Hsieh said.

The company’s growth engine will start to decouple from the cyclical boom-and-bust cycles of traditional memory chips next year, shifting toward multi-faceted drivers led by advanced packaging technology, he said.

Advanced packaging technologies account for about 30 percent of the company’s revenue and the share is expected to expand, he added.

Powertech chairman Tsai Du-kung (蔡篤恭) said the company has transformed from a traditional memory-focused packaging and testing service provider to an indispensable strategic partner for advanced packaging in the AI era.

The company is on track to ramp up production of its advanced fan-out panel-level packaging (PLP) for chips used in AI and high-performance computing applications, Tsai said.

Mass production of PLP is projected to start late next year or in 2028, with customers including cloud service providers that develop their own AI accelerators, tier-one chip designers and AI chipmakers, he said.

Advanced Micro Devices Inc is one of the company’s first customers to adopt the fan-out PLP technology, which is considered more cost-effective than the mainstream chip-on-wafer-on-substrate technology.

Tsai said the company would prioritize internal demand for fan-out PLP capacity and is capable of providing embedded multi-die interconnect bridge (EMIB)-like packaging technology.