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ProMOS reports strong profit, shrugs off Rebar losses

"The strong [profit] performance is a result of growing shipments as we ramped up a new plant faster than expected."

Chen Min-liang, ProMOS chairman

ProMOS Technologies Inc (茂德科技), the nation's third-largest maker of computer memory chips, yesterday said that fourth-quarter net income surged more than 30-fold annually as it shipped more chips to meet market demand.

The chipmaker also shrugged off concerns about estimated losses of NT$950 million (US$29 million) from its holdings of corporate bonds in China Rebar Co (中國力霸) and Chia Hsin Food and Synthetic Fiber Co (嘉新食品化纖), which recently filed for insolvency and restructuring.

"ProMOS is a healthy company and able to handle [such losses]," chairman Chen Min-liang (陳民良) told a press briefing, adding that the company has NT$20 billion (US$611 million) in cash and another NT$20 billion from a syndicated bank loan.

Net income for the October to December period jumped to NT$9 billion, bringing full-year earnings to NT$15.7 billion, the company said.

The NT$950 million losses from investments in the Rebar Group would only erode profits from last year by around 6 percent, Chen said.

"The strong [profit] performance is a result of growing shipments as we ramped up a new plant faster than expected," Chen said.

Gross margin climbed to more than 50 percent, while revenues surged to a record high at NT$22.2 billion during the fourth quarter.

ProMOS said it planned to spend US$1.2 billion on new equipment and facilities this year.

Separately, the chipmaker said that its US$365 million Chinese plant would start mass production in the second quarter of next year, with a maximum monthly capacity of 60,000 wafers.

The government announced late last month that local chipmakers would be able to apply to manufacture chips using 0.18-micron process technology in China.

The company added that it planned to set up a new subsidiary with US$10 million in initial capital in the current quarter to design and market CMOS image sensors, which are mainly used in handsets, to cope with burgeoning demand in the Chinese and Indian markets.

Last week, ProMOS' US$900 million investment to build 200mm wafer plants in Chongqing, Sichuan Province, was approved by the Chinese authorities, with the project expected to be completed in the first half of this year.
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