BY JEFFREY C. DEMMIN
For the most part, the good news still has not arrived in the packaging and test sub-contractor world. A few of the larger providers, most notably Amkor Technology Inc. and ST Assembly Test Services Ltd. (STATS), could cite some good news in the first quarter of 2003, but the others saw measurable declines in revenue, and losses continuing in the range of two to twenty cents per share.
Amkor's revenue declined by 8 percent, which was about the average for the top sub-contractors, but it managed to turn in a profit in the first quarter. The company cited the cost reduction programs that have been implemented, as well as reduced depreciation and increased utilization of its factories. Amkor also noted a diversified customer base, telling Advanced Packaging that its top 10 customers accounted for less than half of its revenue (46 percent). In contrast, Advanced Semiconductor Engineering Inc. (ASE), which is still more diversified than some other sub-contractors, saw almost as much of its business (40 percent) from its top 5 customers, and 57 percent of its revenues from its top 10 customers.
 Figure 1. Quarterly revenue at assembly and test sub-contractors over the last five quarters. |
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The only company evaluated here that saw an increase in revenue in the first quarter compared to the fourth quarter was STATS. As shown in Figure 1, it is the only company to have revenue increasing each quarter since the beginning of 2002. One interesting detail in its quarterly report is that more of its revenue came from its testing business than its packaging business (51 vs. 49 percent). STATS has also decreased its operating expenses to help its bottom line.
 Figure 2. The distribution of revenue among product categories differed significantly among some of the top packaging sub-contractors during the first quarter of 2003. |
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ChipPAC had a relatively small drop in revenue, and with a 10 percent drop at OSE USA Inc., ChipPAC has jumped ahead of OSE in the revenue rankings of subcontractors. With the growth at STATS, there is a logjam forming in the space behind the top three. The rankings by the end of 2003 could be somewhat different from 2002. One piece of news in ChipPAC's report is that three new customers broke into its top 10 list, which is a good step for the company in its effort to diversify its customer base.
ChipPAC is also optimistic about its second quarter, predicting a 10 to 15 percent growth in revenue. Amkor predicts 10 percent, STATS predicts 5 to 10 percent, and ASAT Holdings Ltd. predicts 8 to 12 percent. It would not be surprising to see continued stagnation in the second quarter financial reports due to the impact of SARS on consumer and industrial activity in Asia.
JEFFREY C. DEMMIN, a member of Advanced Packaging's Editorial Advisory Board and director of product marketing at Tessera Technologies Inc., may be contacted at 3099 Orchard Dr., San Jose, CA 95134; (408) 383-3691. E-mail: [email protected].