Backend house Powertech Technology (PTI) has seen its order visibility extend to the third quarter of 2018, but expressed concerns that tight supplies of certain components and materials will affect its supply.

The escalating trade tensions between China and the US are also likely to create uncertainty about the future market development, said PTI president Jia Yu Hong at an April 24 investors meeting.

Demand for handsets and PCs is expected to pick up at a gradual pace later in the second quarter, while demand for high performance computing and data center applications remains positive, Yu indicated. Meanwhile, demand coming from the consumer electronics, communications and automotive electronics sectors is growing steadily, Yu added.

NAND flash demand is expected to pick up between the second and the third quarter of 2018, driven by the rising adoption of SSDs in notebooks and data center systems, Yu noted. As for the DRAM segment, PTI's plant in Xian, China has expanded substantially the company's supply and started making a positive contribution to company revenues, Yu said. PTI expects sales generated from the DRAM sector to peak for 2018 in the second and third quarters.

PTI has also enjoyed steady growth in its high-end logic IC packaging business, Yu said. Meanwhile, subsidiary Greatek Electronics continues to perform well in the conventional logic IC packaging segment.

PTI has seen clear order visibility through the third quarter, but the company is keeping a close eye on whether tight supplies of certain components and materials such as 8-inch wafers, passive components and substrates could bring impact to its supply particularly that for mobile DRAM memory, Yu indicated.

Yu reiterated the company's capacity expansion plan that production capacity for NAND flash memory will increase more than 20% while that for flip-chip packaging will hike 100%. PTI's capex for 2018 is estimated at about NT$15 billion.

PTI reported consolidated revenues for the first quarter of 2018 increased 25.7% on year but decreased 4.8% sequentially to NT$15.91 billion (US$536.7 million). The company credited its on-year revenue growth to recognized sales from Japan-based Micron Akita and Tera Probe it acquired in 2017, sales generated from its Xian plant, rising backend orders for NAND flash devices, and robust orders for logic chips at subsidiary Greatek.

PTI's gross margin slid 1.1pp on quarter and 1.4pp from a year earlier to 20.4% in the first quarter of 2018, while operating margin came to 14.7% down 0.8pp sequentially and 1.5pp on year. An unfavorable product mix and the NT dollar appreciation led to the margin decreases.

PTI generated net profits of NT$1.29 billion in the first quarter of 2018, down 22% on quarter and 10.8% from a year ago. EPS for the quarter came to NT$1.66.