SSP Posts US$59.84 M in Revenues in First Quarter of 2019
Publicly listed SFA Semicon Philippines Corporation (PSE: SSP) disclosed that it posted gross revenues of US $59.84 million in the first three months of the year, up by 17% from the US $ 51.00 million posted in the same period last year.
The Company attributed the expansion in revenues from higher production of memory modules.
However, the Company recorded first quarter net loss of $0.35 million during the period in review, compared to a net income of $0.11 million in 2018. The deterioration in after tax net income was principally due to the shift in customer orders that increased the share of higher-cost DRAM modules and decreased the share of higher-margin component memory chips in the production mix in the first quarter.
The Company also started to record the depreciation expense for the Phase 2 facility which is underutilized this year. SSP has conducted test production runs and certification with other potential customers in 2018 and the first quarter of 2019 in Phase 2. It continues to negotiate with prospective new clients and qualification of new products.
During the period, the Company produced 145.82 million DRAM modules, constituting almost 90% of total production output, and registered a 16% increase from the 126.14 million units produced last year.
Comparatively, a total of 12.66 million component chips (mainly flip chip-packaged integrated circuit devices) were produced in the first quarter, down 59% from the 31.08 million units in the same period in 2018.
The decrease in output of component chips has been the first time since SSP started producing stand-alone chips for its customer in 2017. The shift in the product mix towards more volumes of DRAM modules compared to chips has led to the deterioration of gross margins. Modules make use of more raw materials, notably the printed circuit board assembly in which memory chips, MOS transistors, capacitors and other raw materials.
Production of memory cards and other NAND-based devices declined 41% from the 7.37 million last year to 4.34 million in 2019. Demand for cards has been affected by overproduction that transpired in 2018.
SSP produced a total of 162.81 million memory units during the period in review, 1% higher than the 164.59 million output in the same period last year. The export value of all shipments from the Company’s manufacturing facility decreased from $0.74 billion in the first quarter, to $0.73 billion in in 2018. But the Company remains one of Clark Freeport’s largest semiconductor exporters.
The outlook for the global semiconductor industry appeared weak in view of the decline in demand and shipments of smartphones and the excess inventory of memory products that arose from the strong industry expansion in 2018.