Amkor to raise prices, reduces second quarter outlook
By Mark LaPedus , Silicon Strategies
July 01, 2004
URL: eetimes.com
CHANDLER, Ariz. — Hit by a sudden slowdown in the wireless sector, Amkor Technology Inc. on Thursday (July 1) said it has raised prices for select products and reduced its earnings forecast for the second quarter of 2004.
The chip packaging giant has reduced its second-quarter outlook for the second time, following legal problems and other issues (see May 5 story). And after disappointing results in the first quarter of 2004, Amkor was attempting to raise its chip-packaging prices, according to a report from RBC Capital Markets in May (see May 26 story).
Amkor said revenues for the second quarter are expected to be approximately 6 percent higher than the first quarter of 2004, compared with prior guidance of up 5-to-8 percent.
Amkor expects gross margin for the second quarter to be around 19 percent compared with prior guidance of around 24 percent. Net income for the second quarter is expected to be approximately 6 cents per diluted share, compared with prior guidance of 17-to-22 cents, principally due to lower than anticipated gross margin.
"Our second quarter gross margin shortfall is primarily attributable to a very unfavorable product mix," said Ken Joyce, Amkor's chief financial officer, in a statement. "Our revenue from several high-margin advanced packages, including MicroLeadFrame, stacked CSP and ChipArrayBGA, was less than we expected, reflecting weaker-than-normal support of customer forecasts in the wireless sector and some shortages of high-end wafers from the foundries," he said.
"The soft demand in our higher margin advanced packages was offset by stronger than anticipated support of forecasts in our lower margin PBGA business. In addition, we are still absorbing higher factory costs related to our capacity expansion initiatives, as well as an overall rise in material costs," he added.
The company is taking steps to offset the shortfall. "In order to improve our margins during the second half of 2004, we are focusing our efforts on enriching our product mix, selectively raising prices, accelerating our movement to lower cost material vendors and negotiating lower prices with our existing laminate substrate vendors," said Bruce Freyman, Amkor's president and CEO.
"While forecasting the product mix has been difficult so far this year, if normal seasonal trends hold, we would expect an improvement in our product mix in the second half of 2004," he said. |
