Phoenix Semicon net down 23% on weak demand

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LISTED South Korean chipmaker Phoenix Semiconductor Philippines Corp. (PSPC) said its net income in 2015 fell by more than a fifth due to lower production volumes and weaker demand from main client Samsung Electronics during the second half of the year.

In a disclosure to the Philippine Stock Exchange (PSE) on Monday, Phoenix said net income after tax fell to $13.6 million, down almost 23 percent from $17.45 million the year before.

The decline in net income was attributed to the 10-percent drop in revenue to $208.86 million from $233.33 million in 2014 as production volumes and demand from Samsung Electronics contracted in the second half of last year.

“The global semiconductor industry was affected by the downturn in the China economy and excess inventory levels in the memory segment of the semiconductor industry,” Kyuho Han, the company’s director and treasurer, said in a statement.


He explained that the slump in demand for personal computers and other computing products resulting from China’s economic slowdown led to weaker selling prices for memory devices, which further lowered its profit.

Earnings before income taxes, depreciation and allowances (EBITDA) fell 8.57 percent to $39.25 million in 2015 from $42.93 million in 2014.

On the other hand, it said finance costs declined to $4.04 million from $5.15 million in the previous year as a result of the settlement of a principal loan with its creditor bank during the year.

Total assets stood at $180 million as of December 31, 2015, lower than the $199.52 million recorded in the previous year, as retained earnings declined.

Stockholders’ equity amounted to $99.92, translating to a return on equity (ROE) of 14 percent for the year.

“PSPC’s financials remain sound as evidenced by positive liquidity and the continued healthy operational efficiencies in 2015,” Han said, adding that the semiconductor industry is characterized by cyclical movements and that the company is financially strong to cope with industry fluctuations.

PSPC has an exclusive supply chain partnership with Samsung, a global leader in consumer electronics and the world’s second largest semiconductor company. Also, it is one of five outsourced semiconductor assembly and test providers in the world that has a long-term supply chain contract with Samsung.

Hans said the company is confident that its business transaction agreement with Samsung Electronics will be renewed within the year.

“The current weakness in the global economy due to the China slowdown is expected to ease and reverse in the second semester of 2016,” Han said, adding that the economic recovery will benefit PSPC as its fundamentals remain intact and that its current Phase 1 manufacturing plant can absorb increased demand in the short-term.

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