IC packager Advanced Semiconductor Engineering (ASE) has forecast shipments for the fourth quarter of 2011 will decrease 3-4% sequentially, due to weak demand from Europe- and Japan-based IDM customers. But ASPs for the quarter are expected to stay unchanged allowing the company to post flat gross margin compared with the third quarter.

ASE's sales performance during the fourth quarter will depend on end-market demand, according to company CFO Joseph Tung. Sales in the third quarter were being affected by inventory correction in the supply chain, but the inventory digestion is near its end, said Tung.

Utilization rates for ASE's packaging and testing capacity are estimated at 85% and 80%, respectively, compared to 85-90% and 80% in the third quarter. Meanwhile, ASE expects to continue utilizing 100% of its flip-chip (FC) packaging capacity in the fourth quarter.

In addition, the proportion of IDM customers in ASE's overall sales is likely to see another contraction in the fourth quarter, Tung pointed out. ASE's IDM customer ratio shrank to 35% in the third quarter from 38% in the second. The ratio stood at 41% in the third quarter of 2010.

Despite that, ASE's fourth-quarter ASPs will stay unchanged thanks to expanding copper bonding, Tung noted. Gross margin for the fourth quarter is expected to be similar to the prior quarter's level.

Tung also revealed that the company still maintains its capex budget for 2011 at US$750 million, and next year's capex is likely to be similar to the 2011 level.

ASE reported NT$3.47 billion (US$116 million) in net profits on consolidated revenues of NT$46.7 billion for the third quarter of 2011. EPS came to NT$0.52.