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Siliconware Precision Industries Co. Ltd. (NASDAQ: SPIL)

Siliconware Precision Industries Co. Ltd. (SPIL) is a leading provider of comprehensive semiconductor assembly and test services. The Company offers integrated circuit packaging and testing requirements with various solutions, including design consultations, modeling and simulations, wafer bumping, wafer probe and sort, package assembly, final test, burn-in, and drop ship. SPIL’s products include advanced leadframe and substrate packages, which are widely used in personal computers, communications, Internet appliances, cellular phones, digital cameras, cable modems, personal digital assistants and LCD monitors. It also supplies services and support to fabless design houses, integrated device manufacturers and wafer foundries.

The Company was established in 1984 and is headquartered in Taichung, Taiwan.

Share Statistics (08-Feb-10)			FY 2007	FY 2008	% Chg	Q3 2008	Q3 2009	% Chg
Symbol	SPIL	Revenue, $Mn	66,177	62,403	-5.70%	17,242	16,733	-2.95%
Current price	$6.13	Gross marg.	26.34%	20.75%	-559 b.p.	23.49%	23.17%	-32 b.p.
52wk Range:	4.18-8.19	Oper. margin	–	12.69%	–	18.22%	9.48%	-874 b.p.
Avg Vol (3m):	2,755,030	Net margin	19.79%	7.04%	1275 b.p.	18.48%	15.31%	-317 b.p.
Market Cap.	3.9B
Dil. Shares Outst.	630.52M	EPS, $	4.32	2.36	-45.37%	1.02	0.82	-19.61 b.p.

Source: Reuters.com, SEC Filings.

Financial Summary

For the fourth quarter of 2009, SPIL reported revenues of NT$ 16,813 million, representing a 0.5% increase compared to the third quarter of 2009 and a 35.1% increase compared to the fourth quarter of 2008.  Net income was NT$ 4,303 million for the fourth quarter of 2009, compared with a net income of NT$ 2,561 million and a net loss of NT$ 1,034 million for the third quarter of 2009 and the fourth quarter of 2008, respectively. Diluted earnings per ordinary share for this quarter was NT$ 1.37; diluted earnings per ADS was US$ 0.21.

SPIL announced its revenues for year 2009 were NT$ 56,886 million, which represented a 5.9% decline in revenues compared to year 2008. Net income for year 2009 was NT$ 8,790 million, compared with a net income of NT$ 6,313 million for year 2008. Diluted earnings per ordinary share for year 2009 was NT$ 2.80; diluted earnings per ADS was US$ 0.43.

As of December 31, 2009, the Company’s cash balances totaled NT$ 19,035 million. Capital expenditures for the fourth quarter of 2009 totaled NT$ 2,937 million, which included NT$ 2,685 million for packaging equipment and NT$ 252 million for testing equipment.  Total depreciation expenses for the fourth quarter of 2009 totaled NT$ 1,930 million, which included NT$ 1,451 million was from packaging operations and NT$ 479 million from testing operations.

Source: www.spil.com.tw

Financial Strength (08-Feb-2010)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	–	4.41	1.51	0.80
Current Ratio (MRQ)	–	5.62	1.78	0.94
LT Debt to Equity (MRQ)	–	11.65	27.76	127.02
Total Debt to Equity (MRQ)	–	17.20	43.79	179.98
Interest Coverage (TTM)	–	-0.27	-0.06	11.74

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=SPIL.O

Analyst Consensus

This is the consensus forecast amongst 23 polled investment analysts. Against the Siliconware Precision Industries Co Ltd company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	5	3	12	2	1	0
4 weeks ago	4	4	14	0	1	0
2 months ago	3	3	16	0	0	0
3 months ago	5	3	15	0	0	0
Last year	3	3	7	5	3	1

Source: markets.ft.com

Consensus Estimates Analysis

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Year Ending Dec-10	1	2,133.01	2,133.01	2,133.01	1,616.21
Year Ending Dec-11	1	2,295.38	2,295.38	2,295.38	–
EARNINGS (per share)
Quarter Ending Mar-10	1	0.10	0.10	0.10	–
Year Ending Dec-10	2	0.44	0.45	0.44	0.25
Year Ending Dec-11	2	0.56	0.56	0.56	–
LT Growth Rate (%)	1	20.00	20.00	20.00	20.00

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=SPIL.O

Investment Highlights

Since its founding in 1984, SPIL has grown to become one of the leading providers of comprehensive semiconductor assembly and test services. It posted annual sales of $1.92 billion in 2008 and currently employs around 15,000 people worldwide. According to Gartner’s worldwide market share report for semiconductor assembly and test services (SATS), released in February 2009, SPIL’s market share is estimated 9.6% in 2008, the third largest vendor in the field.

During 2008, the Company’s major customers included Advanced Micro Devices Inc., Broadcom Corp., Intel Corp., MediaTek Inc., Marvell Semiconductor Inc., NVIDIA Corp., SanDisk Corp. and Xilinx Inc. It targets customers in the personal computer, communications, consumer integrated circuits (ICs) and non-commodity memory semiconductor markets.

Products and Services

Packaging Services: The Company offers a range of package formats designed to provide its customers with an array of packaging solutions. The packaging solutions offered to its customers include substrate packages, which include ball grid array and system in packages (incorporating multiple semiconductor chips) and flip-chip ball grid array packages, together with lead-frame packages. Its flip-chip ball grid array packages are based on the Flex-On-Cap wafer bumping and redistribution technologies. The Company’s substrate packaging has balls on the bottom of the package that create the electrical connections with the electronic system and can support larger numbers of electrical connections.

Testing and Other Services

Semiconductor testing measures and ensures the performance, functionality and reliability of a packaged semiconductor device. In addition to maintaining different types of advanced testing equipment, which enables the Company to test a variety of semiconductor device functions, the Company works closely with its customers to develop and convert programs to test particular semiconductor products on multiple equipment platforms. The Company also provides a variety of testing services, including wafer probing, final testing and other testing services. Wafer probing is the step immediately before packaging of ICs and involves sorting the processed wafer for defects to ensure that it meets customer acceptance criteria. ICs on an accepted wafer are then individually inspected visually under microscopes before packaging and final testing. In addition to wafer probing and final testing services, the Company also provides system-level testing service for testing products on motherboards; test during burn-in (TDBI) service to screen out device infant mortality; laser repair/laser trim service to modify device connection structure for specific product applications; lead/ball scanner service to screen out abnormal products, including bent lead or ball defective devices, so as to prevent them from being shipped to the end customers; marking service to specify the customer logo and batch identification on products, and tape and reel service to packaging devices into one complete reel for surface mount operation.

Recent Company News

SPIL swung back to a profit of NT$4.3 billion in the fourth quarter, reversing a net loss of NT$1.03 billion in the same period a year earlier. The Company reported a boost in orders from chip makers, an early indicator the recession may be easing.

Looking forward to growth in 2010, SPIL CEO Bough Lin said in an investor’s conference that the Company expects a rise in capital expenditure as it plans to build new factories in Taiwan and China to meet a surge in demand.

The semiconductor industry, being impacted by the financial crisis that has significantly weakened consumer confidence, was given a negative outlook in 2009. However, as the global economy recovers, RNCOS’ research report “Semiconductor Industry Forecast to 2012″ projected improvement in 2010 and afterwards. As a result, the global semiconductor market has been forecast to grow at a respectable CAGR of nearly 7% through 2012.

Technical Analysis

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Source: http://stockcharts.com/h-sc/ui

SPIL is below its 13 day moving average. This bearish sign is even more significant because the moving average is also trending lower.

SPIL’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally,  SPIL is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

The MACD for SPIL currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Feb-08-2010	symbol	Share, $	$ Mn	2009	2010	2009	2010
Advanced Semiconductor Engineering (ADR)	ASX	4.05	4,170	20.25	13.5	1.62	1.32
Amkor Technology Inc.	AMKR	5.77	1,060	18.03	7.30	0.49	0.41
ASAT Holdings Limited (ADR)	ASTTY	0.0063	n/a	–	–	–	–
Trio-Tech International	TRT	3.99	12.88	–	–	–	–
Semiconductor Equipment & Materials Median				58.44	–	2.35	–
Siliconware Precision Industries (ADR)	SPIL	6.13	3,900	14.95	13.93	1.60	–

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHSE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	n/a
Sales	n/a	n/a
Net Shares Purchased (Sold)	n/a	n/a
Total Insider Shares Held	n/a	n/a
% Net Shares Purchased (Sold)	n/a	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	n/a
% Change in Institutional Shares Held	n/a

Source: Yahoo Finance

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