With Taiwan Semiconductor Manufacturing Company (TSMC) forecasting a sequential decline in fourth-quarter revenues, Advanced Semiconductor Engineering (ASE) and other backend companies are likely to stay cautious about their business outlook through the first quarter of 2016, according to industry sources.

TSMC on September 23 released its revenue outlook for fourth-quarter 2015, forecasting it will register an about 6% sequential decrease. The guidance also comes below market watchers' estimate of flat or slight sequential growth.

Continued weakness in chip orders for smartphones particularly Android phones, as well as sluggish demand for consumer electronics devices and PCs, led to TSMC's disappointing outlook for fourth-quarter 2015, according to some market observers. TSMC remarked in mid-July that excess inventory at its clients particularly those in the handset sector might not be eased until the fourth quarter of 2015.

Though TSMC reiterated its target of double-digit growth in overall 2015 sales, growth might be just slightly above 10%, according to the observers.

Backend houses including ASE and Siliconware Precision Industries (SPIL) are likely to deliver a cautious outlook for fourth-quarter 2015 and first-quarter 2016, according to industry sources. In fact, both companies' cumulative 2015 revenues have started to see smaller on-year growth rates in recent months.

ASE said at the end of July that inventory adjustments in the semiconductor industry would be under control in the second half of 2015, and the company would manage to post sequential revenue growth through the fourth quarter.

SPIL already warned of low order visibility for the second half of 2015. A pull-in of short lead-time orders could emerge in the fourth quarter, but there remains uncertainty over end-market demand, SPIL chairman Bough Lin said at the company's most-recent investors meeting in July.