Order visibility for the testing and packaging sector for the third quarter remains low, and weak demand could last through the end of the year, according to Siliconware Precision Industry (SPIL) chairman Bough Lin.

Lin said quarterly changes in the testing and packaging sector will be limited in the second half of the year chiefly because of the weak US economy.

He said third-quarter visibility remains low, and the uncertainties shrouding the global economy and the fast changing market situations are making it difficult to estimate whether the packaging and testing sector will have a double-digit growth for the third quarter, as it has previously.

The worst-case scenario is that if the packaging and testing sector is hit by weak demand in the second half of 2008, recovery may not come until the first half of 2009, Lin remarked.

Commenting on some industry observers' worries that demand would drop significantly after the Beijing Olympics, Lin said that in the past some segments of the consumer market did see increases in demand prior to the Olympic games and decreases after them. But it may not necessarily be the same this year, and actual demand will still need further assessment, he said.

But Lin did call attention to a positive aspect when pointing out the slow capacity increases in the testing and packaging sector. He said since mid 2007 players have been cautious about expanding their capacity, with major investment going into elevating technological levels in order to stay competitive.

While average selling prices (ASPs) have been dropping fast, the significant growth in shipments has helped cushion the pressure on revenues, Lin said.

Lin revealed that SPIL's second-quarter results will meet its previous forecast, with sequential sales growth expected at 1-5%.

In terms of applications, the PC segment in SPIL's shipments had flat growth in April and May, and the memory and handset segments had poor performance, he said. But demand in the networking segment has been good, with rather strong shipments in June, he added.