Higher gold prices have prompted chip packaging houses to consider transferring rising material costs to customers. Advanced Semiconductor Engineering (ASE) started adjusting quotes for new products and contracts earlier in May, which is likely to encourage peer Silicon Precision Industries (SPIL) to soon follow suit, according to industry sources in Taiwan.
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.
Gold price approached US$1,250 an ounce on May 14, striking an all-time high. On May 18, the London PM gold fix was US$1,216.75 versus the previous AM fixing of US$1,215.