Walton Advanced Engineering, which provides packaging and testing services for memory chips, has expressed caution about its business outlook for 2013. Filling under-utilized capacity will now be a top priority, and thus Walton has no plans to build new capacity in 2013, according to company president Yu Hong-chi.

Walton will focus 2013 capex on upgrading equipment and facilities, with its primary development target remaining mobile DRAM and niche-market memory, Yu indicated. Walton has budgeted NT$1.2 billion (US$41.4 million) in capex for 2013, compared to the NT$2.2 billion allocated in 2012.

In 2012, the majority of Walton's capital spending was used to expand capacity for mobile DRAM chips, Yu indicated. However, when new capacity came online, demand failed to arrive in time causing the company's overall utilization rate to drop. Meanwhile, depreciation of production equipment also had a negative impact on Walton's gross margin and profit performance during the year, Yu pointed out.

Looking forward, Walton has adopted a cautious stance given that demand for PC DRAM will continue to fall and the number of DRAM makers will reduce, Yu said.

Yu revealed that Walton's utilization rates have improved since the first quarter of 2013. Its business operations are expected to rebound starting the second quarter of the year, Yu said.

Walton fell into the red in 2012, due mainly to uncollected accounts receivable from Elpida Memory. The backend house reported net losses of NT$0.45 per share on revenues of NT$8.29 billion for the year.

Without recognizing the loss of accounts receivable from Elpida, Walton would have posted net profits of about NT$0.99 per share.