Stats ChipPac narrows Q2 net loss on strength of mobile computing

Employees at the production line at Stats ChipPac, which provides semiconductor packaging and testing services. -- PHOTO: ST FILE 
Employees at the production line at Stats ChipPac, which provides semiconductor packaging and testing services. -- PHOTO: ST FILE 

SINGAPORE - Stats ChipPac, which provides semiconductor packaging and testing services, has posted much improved results.

Net loss for the second quarter ended June 29 narrowed to US$4.2 million ($5.2 million) from US$52.2 million previously.

Revenue rose 3.4 per cent to US$409.9 million, due to strong growth in its mobile communications business, driven by demand for the emerging market wireless chipsets and next-generation long-tem evolution processors.

Operating margin improved to 3.4 per cent of revenue, compared to 0.7 per cent in the first quarter and 0.9 per cent in the same period last year.

Stats president and chief executive officer Tan Lay Koon said revenue came in at the high end of a range that the company had earlier signposted, noting the strength in the mobile communications segment.

"In addition, we saw general seasonal market rebound in the computing and consumer segments," he said.

Chief financial officer Dennis Chia noted that gross margin improved to 12.2 per cent compared to 10 in the prior quarter.

"Gross margin this quarter included higher production ramp-up cost associated with our expansion for several key advanced packaging programmes."

Net asset value per share slipped to 43 US cents, down marginally from 44 US cents as at Dec 29 last year.

Looking ahead, Mr Tan projected third quarter revenues to increase 2-8 per cent against the second quarter, with adjusted EBITDA - a gauge of operating profit - in the range of 20-25 per cent of revenue.

We expect capital expenditure in the third quarter of 2014 to be approximately US$175 million to US$205 million, including approximately US$75 million to US$95 million for progressive construction of the new factory in Korea."

The company did not give any update on how talks are progressing with certain parties over a possibility of a takeover.

Its shares soared to a high of 65 cents in June on talks that it may be a takeover target.

The fervour cooled after Stats said it had discontinued talks with a potential buyer but that it was still in discussions with other parties.

Since then, the stock price has dwindled down. It closed 2.5 cents lower at 56.5 cents.