Vanguard International Semiconductor Co. reported second-quarter results that highlighted the growing pressure on Taiwan’s smaller foundries as currency appreciation erodes profitability despite recovering demand.
The Taiwanese chip manufacturer posted NT$11.699 billion ($408 million) in consolidated revenue for the quarter, down 2.1% sequentially but up 5.73% year-over-year. Net profit attributable to the parent company reached NT$2.043 billion ($71 million), declining 15.36% from the previous quarter while still managing 13.6% annual growth. Earnings per share stood at NT$1.11.
However, gross margin deteriorated to 28%, falling 2.1 percentage points as the New Taiwan dollar’s strength against the U.S. currency squeezed overseas revenue conversion. The company cited reduced shipments of display driver integrated circuits (DDIC) as a primary headwind, reflecting broader challenges in the mature foundry sector.
Chief Executive Officer Wei Chi-shih acknowledged that DDIC wafer shipments declined during the quarter, though demand from communications, industrial control, and automotive applications showed signs of recovery. Despite overall wafer shipments rising 3% and average selling prices gaining 1%, currency headwinds and shifting product mix toward lower-margin offerings pressured profitability.
Looking ahead, Vanguard International expects continued growth in wafer shipments and pricing for the third quarter, assuming an exchange rate of NT$28.7 per dollar. However, management warned that gross margins could compress further to 25-27% due to persistent currency pressures and capacity adjustment costs, signaling ongoing challenges for Taiwan’s foundry operators as the dollar strengthens.
