IC packager Siliconware Precision Industries (SPIL) expects its consolidated revenues to stay flat or drop by up to 3% sequentially in the fourth quarter of 2012, due to weak demand coming from the PC sector. Gross margin and operating margin for the quarter will fall from the prior quarter's levels, as a result of rising gold prices and appreciation of the NT dollar, according to company chairman Bough Lin.

SPIL reported consolidated sales of NT$16.85 billion (US$576 million) for the third quarter of 2012, up about 2% sequentially and meeting the low end of its guidance range. Net profits grew 15.6% on quarter to NT$1.7 billion, or NT$0.55 per share, which outpaced rival Advanced Semiconductor Engineering's (ASE) NT$0.45.

However, Lin expressed caution about SPIL's performance during the fourth quarter of 2012. Robust growth coming from the mobile device end market will be partially offset by the continued weakness in the PC sector, Lin said.

ASE has a more optimistic forecast, estimating a shipment increase of 3-5% sequentially in the fourth quarter. Demand for smartphone-use and 28nm-made IC solutions will drive company growth during the quarter, the firm noted.

Lin indicated that SPIL has seen its customers become more cautious about placing orders recently. Nonetheless, with the PC supply chain digesting excess inventory and continued-strong demand for mobile devices, customer orders will likely pick up starting the first quarter of 2013.

Lin added that overall, he holds a positive attitude toward Taiwan's IC foundry and backend industry outlook for 2013.

In addition, SPIL has revised downward its capex target for 2012 to NT$16.4 billion, from the NT$17.5 billion estimated previously. Capex for 2013 will likely come under NT$11 billion, Lin pointed out, adding that the expenditure allocated in 2013 will be mainly used to build new capacity for flip-chip (FC) packaging.

As for transition from gold to copper wirebonding, SPIL saw sales generated from copper wirebonding accounted for 55.1% in the third quarter of 2012. The proportion will top 60% in the fourth quarter, Lin said.

Still, the appreciation of the NT dollar will weigh on SPIL's margin performance in the fourth quarter, besides the rising price of gold. SPIL expects its fourth-quarter gross margin and operating margin to be 17.5-18.5% and 9-10%, respectively, both showing sequential decreases.