Taiwanese chip packaging firms have seen their margins shrink due to the high price of gold. Advanced Semiconductor Engineering (ASE) reportedly started adjusting quotes for new products and contracts earlier in May after it saw its gross margin for IC packaging decrease 2 percent sequentially to 19 percent, and Silicon Precision Industries (SPIL) is expected to soon follow suit.
Though chip packagers are speeding up their transition to copper wire processes, they are still concerned about the high gold prices that will inevitably hurt their profitability, the sources said. As gold wire bonding still accounts for more than 70% of some suppliers' total packaged IC shipments, the price of gold still plays a key part in their gross margin performance, the sources indicated.
ASE, which saw copper wire bonding contributes 6% to its total packaging revenues in the first quarter, has reported that gross margin for IC packaging slid 2pp sequentially to 19% in the first quarter.
SPIL revealed in its quarterly financial report that gross margin for the first quarter decreased to 16% from 20.1% in the fourth quarter of 2009.