Packaging and testing company Powertech Technology (PTI) has posted net profits of NT$1.13 billion (US$35.2 million) for the second quarter of 2016, up 20.1% sequentially, while consolidated revenues increased 6.6% on quarter to NT$11.32 billion. EPS came to NT$1.45 compared with NT$1.21 reported for the first quarter.

PTI's revenues and net profits for second-quarter 2016 represented on-year increases of 10.5% and 21.8%, respectively. The company generated a 21.5% gross margin in the second quarter compared with 18.7% a year earlier and 19.4% in the prior quarter.

PTI's packaging business accounted for 76% of the company's overall revenues in the second quarter of 2016, up from 73% in the previous quarter and 72% a year ago.

Sales generated from the memory IC sector accounted for 72% of PTI's total revenues in the second quarter of 2016. The company also provides packaging and testing services for logic chips, such as wafer bumping and flip-chip packaging, which made up the remaining 28%.

PTI's revenues for the first half of 2016 increased 11.5% from a year ago to NT$21.94 billion, while EPS soared 20.4% on year to NT$2.66. Gross margin for the six-month period reached 20.5%.

PTI expects to post another double-digit on-year growth in third-quarter revenues. The supply of commodity DRAM has fallen short of demand pushing up the memory contract prices recently, while memory density in high-end smartphones and servers continues to rise, PTI president Hung Jia-yu told at a July 26 investors meeting.

Meanwhile, rising flash memory content per smartphone and greater SSD penetration will encourage PTI to improve technology and boost production capacity for the memory, Hung said.

As for logic chips, strong demand for mobile devices will still constrain supply in the third quarter, Hung added. Hung expressed optimism about PTI's overall business in the third quarter.

PTI's packaging utilization rate will climb to between 85% and 90% in the third quarter from about 80% in the second, while utilization rate for its testing segment will rise to 80% from 75% in the prior quarter, Hung indicated.

PTI reiterated its capex target of NT$12 billion for 2016, which will be used to expand the company's bumping, flip-chip and wirebonding capacity. Another capex focus is the development of panel-level fan-out packaging solutions, which are expected to enter volume production in the second half of 2017, Hung noted.