The rising price of gold and the appreciation of the NT dollar, triggered by the launch the US Federal Reserve's third round of the quantitative easing (QE3) is expected to weigh on the performance of IC backend service companies in September as well as in the fourth quarter of 2012, according to industry sources.

The NT dollar closed at NT$29.451 against the US dollar on Taiwan's foreign exchange market on September 25, a rise of 1.718% or NT$0.515 from the rate closed at the end of August, according to market data.

In other words, an export-oriented electronics company will see a loss of NT$51.5 million (US$1.75 million) in revenues for every US$100 million worth of products it shipped in the first half of September, the sources calculated.

Since about 60-80% of revenues of the top-2 backend service companies, Advanced Semiconductor Engineering (ASE) and Silicon Precision Industries (SPIL), are calculated in the US dollar, the rising value of the local currency certainly affect revenues and gross margins at the two companies, commented the sources.

For the appreciation of every NT$1 dollar against the greenback, the gross margins of ASE, SPIL, Powertech Technology (PTI), and Walton Advanced Engineering will be eroded by 1pp, 1.5-1.6pp, 1.5-2.0pp and 1.6pp, respectively, estimated the sources.

Although backend service companies have been actively switching to copper wirebonding for their logic IC packaging lines, the cost of gold threads still accounts for 12% of revenues of service companies on average, the sources noted.