Higher costs weigh on SFA Semicon profit

SEMICONDUCTOR assembly and test company SFA Semicon Philippines Corp. said on Friday that higher raw material costs weighed on earnings in 2017.

The company reported a 71.5-percent decline in net income last year, to $1.83 million versus the $6.42 million recorded in 2016.

However, gross revenues increased 21 percent to $207.77 million in 2017 from $171.82 million the previous year.

“The memory segment in the outsourced semiconductor assembly and test (OSAT) industry was affected by increased cost of raw materials and price pressures due to intense competition among OSAT players,” SFA Semicon President Byunggil Go said in a statement.

“The DRAM and NAND memory OSATs were faced with supply constraints in raw materials due to the unexpectedly strong recovery in final-market demand in the global semiconductor industry,” he said.

SFA said net earnings were affected by the 29 percent rise in cost of sales, which includes raw materials, depreciation, labor and other manufacturing costs, to $201.07 million. The increased costs resulted in a 54 percent decline in gross profit from $15.40 million in 2016 to $6.70 million last year.

Meanwhile, the company attributed the 21 percent gross revenue increase to the 11 percent expansion of production volumes, with a full-year output of 655 million memory devices from 591 million units during the previous year, and the shift in product mix to DDR4 DRAM modules and new orders for the new-generation eMMC line.

Last year, the company produced 427 million DDR4 DRAM memory modules, 121 million DDR3 DRAM memory modules and 69 million IC memory component chips.

The company said finance cost was reduced by 50 percent last year to $1.4 million as SFA Semicon refrained from long-term borrowings for the construction of the recently completed Phase 2 manufacturing facility, which is intended to cater to more clients other than Samsung.

SOURCE: http://www.manilatimes.net/higher-costs-weigh-on-sfa-semicon-profit/392433/