IC packaging and testing companies will suffer setbacks in revenues during January and February because of inventory adjustments at clients, as well as fewer working days due to the Lunar New Year holidays, according to Bough Lin, chairman of Siliconware Precision Industries (SPIL).

Sales will start picking up in March, however, and rebound through the second half of 2013, said Lin. IC backend houses should have their sales hit the lowest quarterly level for the year in the first quarter, Lin indicated.

Lin noted that all of SPIL's product segments will suffer utilization rate decreases sequentially in the first quarter of 2013. Demand for consumer electronics and memory applications is set to fall significantly in the first quarter, while demand coming from the communications and PC sectors will decrease slightly, Lin said.

SPIL will likely utilize 80-85% of its wire-bonding capacity in the first quarter of 2013, down from 95% in fourth-quarter 2012, according to Lin. Meanwhile, utilization rates of its flip-chip (FC) packaging and logic IC testing capacity will both arrive at 68-72% from 80% in the prior quarter. Lin did not provide a revenue estimate.

Judging from the utilization rates projected by the company, market watchers expect SPIL to post a revenue decline of 10-15% sequentially in the first quarter of 2013. The backend firm has seen its major customers, which include MediaTek, AMD and Nvidia, reduce their first-quarter orders by 17-23%, the watchers revealed. Meanwhile, Marvell, Broadcom and Xilinx also cut their orders to SPIL by 4-9% in the first quarter, the watchers added.

SPIL reported consolidated revenues of NT$16.15 billion (US$554 million) for the fourth quarter of 2012, down 4.2% sequentially, with net profits slipping 2% on quarter to NT$1.96 billion. Earnings for the quarter translated into a net EPS of NT$0.51.

Fellow firm Advanced Semiconductor Engineering (ASE) has announced net profits of NT$4.39 billion, or NT$0.58 per share, on consolidated sales of NT$56.01 billion for the fourth quarter of 2012. The firm's IC ATM (assembly, test and material) business generated revenues of NT$34.4 billion in the fourth quarter, up 1% sequentially and 8% from a year ago.

ASE expects its core business to post a shipment decrease of 10-13% sequentially in the first quarter of 2013, with gross margin likely to fall 4-5pp due to lower utilization rates. The firm does not provide its revenue guidance.

In other news, both ASE and SPIL expect their capital spending for 2013 to be lower than the levels last year. ASE has allocated US$600-700 million in 2013 capex, compared to the NT$1 billion spent in 2012, while SPIL's capex will reduce to NT$11.3 billion in 2013 from about NT$15 billion in 2012.