In addition to announcing its Q3 financial results and Q4 outlook, VIS Chairman and President Fang Liao, VP and CFO Huang Huilan, and COO Yu Jishi answered questions about the impact of the U.S. Chip Act, capital expenditure plans, and supply chain inventories, among other issues.

First Three Quarters Net Profit of NT$12,801 Million, Surpassing Last Year's Full Year Level

Vanguard's third-quarter results showed a gross margin of 45%, net profit after tax of NT$3.823 billion, a quarterly decrease of 21.76%, and EPS of NT$2.33. Profit for the first three quarters of the year exceeded last year's full year by NT$12.801 billion, with EPS of NT$7.81. However, by the semiconductor inventory adjustment, the world's first also followed the industry to revise the capital expenditure, from the previous $23 billion, down to $21 billion, a drop of about 10%.

Q4 Revenue Falls Below $10 Billion, Capacity Adjustment Helps Customers Balance Inventory

VIS estimates that Q4 revenue will fall to NT$9.5-9.9 billion, a quarterly decrease of 25.7 to 28.7%, gross margin is estimated to fall to 39-41%, a decrease of 5 percentage points based on the midpoint, and operating profit margin will be 25.5-27.5%. CFO Huang Hwee-lan explains that there are currently about 20% of capacity utilized to help customers pre-build inventory. 20% of capacity utilization is used to help customers build up inventory, which supports the gross profit margin compared to the decline in revenue.

Revised Capital Expenditures and Fab Expansion Plans Due to the Impact of the Global Environment

Chief Operating Officer Yu Jishi said that the semiconductor industry has entered into a drastic inventory adjustment impact, coupled with inflation, interest rate hikes and war factors, and therefore downward revision of capital expenditures and next year's fab 5 expansion plan, if customers determine the demand will continue to invest in the expansion of other production capacity will be dynamically reviewed, will communicate closely with customers, and to manage the timing of the arrival of the equipment. As for next year's capital expenditures, he said he would explain in the next legal briefing that they would be lower than this year's. The company will continue to invest if customers' demand is confirmed, while other capacity expansion will be reviewed dynamically. With regard to the geopolitical impact, Fang Liao also believes that the United States and China to reduce reliance on advanced manufacturing processes or applications such as AI, high-efficiency computing, there is no obvious negative impact on the short term, but feel the demand for de-neutralization, such as IDM manufacturers to power management ICs, discrete components to the world to produce. In addition, the world's advanced from China accounted for a double-digit share of sales, Fangliu also mentioned that this part of the see new growth opportunities.