PSMC: Taiwan Quake Hits Q2 Shipments 5-8%

On April 15th, Powerchip Semiconductor Manufacturing Corporation (PSMC), a leading semiconductor foundry, convened its quarterly briefing for Q1 2024, disclosing financial results while addressing the impact of the 7.3 magnitude earthquake in Hualien, Taiwan, on April 3rd. The earthquake resulted in an estimated NT$500 million (approximately RMB 111 million) loss in wafer scrappage, expected to affect Q2 shipments by 5%-8%.

In terms of financial performance, PSMC reported a Q1 revenue of NT$10.82 billion, reflecting a 3% decline from the previous quarter due to reduced working days. Improved production capacity utilization and reduced idle capacity costs boosted Q1 gross margin to 15.4%, up 12.3 percentage points from the previous quarter. After-tax net loss narrowed to NT$439 million, with a loss per share of NT$0.11.

Regarding market conditions, PSMC noted a trough in the current market cycle, with both gross margin and production capacity utilization gradually rebounding, positively impacting revenue. Production capacity utilization for memory production lines rose from approximately 65% in Q4 of the previous year to 95%-98% in Q1 of this year, while logic chip production lines recorded a utilization rate of around 65-70%. Higher utilization rates were observed for 12-inch wafers compared to 8-inch wafers, influenced by competition from mainland China.

Addressing the earthquake's impact, PSMC's CEO, Xie Zaiju, stated that the evaluation revealed no significant damage to factory systems, with water and power supplies operating normally. However, areas such as lithography machines and furnace zones were more affected. The chip scrappage loss is estimated at NT$500 million. Production lines recovered to approximately 80% capacity within three days and are expected to exceed 90% within a week. The earthquake's impact on Q2 shipments is projected at 5-8%. Compensation claims are under evaluation, with an estimated coverage range of 50-60%. Q2 gross margin is anticipated to remain stable or improve compared to Q1.

In terms of capital expenditure, PSMC's total investment for 2024 is within NT$32 billion. The inauguration ceremony for the copper bumping factory is scheduled for May 2nd, with an initial planned monthly capacity of 8,500 wafers. Negotiations regarding funding and subsidies for the Japanese factory are ongoing, with no new developments reported.