Inventory correction near end, says SPIL chairman

Inventory correction in the IC industry supply chain is near its end, according to Bough Lin, chairman for packaging and testing company Siliconware Precision Industries (SPIL). If end-market demand rises substantially, inventory replenishment in the industry is expected to take place at the end of the first quarter, said Lin.

End-market demand was disappointing in 2015 due to slower-than-expected growth in Europe and emerging economies, Lin indicated. Unfavorable macroeconomic factors negatively affected the semiconductor industry.

Thus far in 2016, however, demand in developed markets has been picking up, Lin noted. Growth in developed economies is expected to drive growth in the 2016 global semiconductor industry. Nevertheless, a strong US dollar could hurt industry growth in 2016, while the prospects for end-market device sales remain unclear, Lin said.

SPIL forecasts low single-digit growth for the semiconductor industry in 2016, according to Lin.

Sales of entry-level and mid-range smartphones will be the driving force of smartphone market growth in 2016, as sales of high-end devices will rise at a decelerated pace, Lin indicated. Meanwhile, brisk sales of ultra-thin notebooks could spur notebook market growth in 2016.

Lin also identified IoT as a growing trend in 2016. The IoT market is expected to peak in 2018, Lin said.

Non-operating losses ate up SPIL's operating income and put the company in the red in the fourth quarter of 2015. During the quarter, SPIL recognized a loss of NT$1.86 billion (US$55.7 million) from its investment in Unimicron Technology.

SPIL's sales generated from the communications market will increase slightly in the first quarter of 2016, while those from the PC, consumer electronics and memory segments will decrease compared to the fourth quarter of 2015, Lin said. SPIL expects to utilize 69-73% of its wire-bonding capacity in the first quarter, while utilization rates of its flip-chip (FC) packaging and logic IC testing will reach 64-68% and 60-64%, respectively.

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