• Posted by: Technology Staff Editor
• On: 08/18/2008 16:00:17
• In: Information Technology

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SAN JOSE, Calif. -- Major chip-packaging providers are reporting disappointing news in the quarter.

Taiwan's Advanced Semiconductor Engineering Inc. (ASE) reported decent results, but gave a disappointing outlook. And U.S.-based Amkor Technology Inc. will cut jobs amid a slowdown and a supply-chain snafu.

Amkor--the world's second largest subcontractor--will reduce the workforce in its factories by more than 600 employees in the third quarter of 2008. The charges to cost of sales and selling, general and administrative for the workforce reductions are expected to be approximately $10 million and $1 million, respectively.

Amkor (Chandler, Ariz.) is also slowing its capital spending. The company said second quarter net sales of $691 million were down sequentially 1 percent from the first quarter of 2008 and up 6 percent from the second quarter of 2007.

Second quarter net income was $65 million, down 9 percent from the first quarter of 2008 and up 110 percent from the second quarter of 2007.

''The decline in revenues compared to our prior guidance was due primarily to the production disruptions we experienced as a result of our ERP implementation in the Philippines as customers reduced inventory levels, utilized alternative sources and delayed orders,'' said Ken Joyce, Amkor's president and chief operating officer, in a statement.

''Although normal production capabilities have been restored, we believe our net sales were negatively impacted by approximately $10 million to $15 million by the ERP disruption. We also experienced some weakness from the first quarter in computing, legacy gaming and certain wireless applications,'' he said.

''As we look ahead, we are cautious about increasing softness in the consumer markets and global economic uncertainty. For the third quarter of 2008, we expect revenues to grow sequentially by 4 percent to 6 percent, which is below the level of historical seasonality due to uncertainty around consumer demand,'' said James Kim, Amkor's chairman and chief executive officer.

Net income is expected to be in the range of $0.24 to $0.28 per diluted share in Q3.

Meanwhile, rival ASE, the world's largest independent provider of IC packaging and testing services, reported unaudited net revenues of NT$25.610 billion ($833.1 million) for the second quarter of 2008, up 10 percent year-over-year and up 4 percent sequentially.

Net income for the quarter totaled NT$2.412 billion ($78.5 million), down from NT$2.575 billion ($83.8 million) in 2Q07 and up from NT$2.337 million ($76 million) in 1Q08.

ASE's outlook was disappointing to many. It projected that third-quarter sales ''would rise by a low single digit percent from the second quarter,'' according to Reuters.