Fri, Aug 11, 2017 - Page 12 News List

ChipMOS net profit growth slows due to falling orders

By Lisa Wang  /  Staff reporter

ChipMOS Technologies Inc (南茂), the world’s No. 2 LCD driver IC packaging and testing service provider, yesterday said net profit last quarter edged up 2 percent annually as clients scaled back orders due to flagging smartphone demand in China and fewer orders from a major commodity DRAM client.

ChipMOS said it expects the revenue erosion from the commodity DRAM business to carry into the current quarter as the client continues to diversify suppliers.

The commodity DRAM business accounted for 13 percent of ChipMOS’s total revenue of NT$4.54 billion (US$149.8 million) last quarter, company data showed.


As part of efforts to ameliorate the loss of orders, ChipMOS has landed new orders for testing and packaging services from several consumer electronics companies, chairman S.J. Cheng (鄭世杰) told investors in a teleconference.

“The new products will provide growth momentum in the second half of this year, offsetting the revenue loss from the commodity DRAM business,” Cheng said.

For existing product lines, clients have signaled resilient demand for niche DRAM chips and NOR flash memory chips due to rising adoption of organic LED displays and image identification sensors for smartphones, he said.

Cheng said he expects the growth momentum for niche DRAM and NOR flash memory chips to extend into the next few quarters.

The launch of new smartphones in the second half will fuel demand for better-margin testing and packaging services for display driver ICs, as the handsets are expected to be equipped with new features such as organic LED and 18:9 aspect ratio displays, the firm said.

The driver IC testing and packaging business contributed 25 percent of the company’s total revenue last quarter, it added.

In the quarter ended June 30, net profit rose to NT$321 million, compared with NT$314.9 million in the same period last year, while earnings per share increased from NT$0.37 to NT$0.38 year-on-year, company data showed.


However, net profit plunged 86.5 percent from NT$2.38 billion in the first quarter, when ChipMOS booked a NT$2 billion asset disposal gain from selling a 52 percent stake in Chinese driver IC manufacturing subsidiary ChipMOS Technologies (Shanghai) Ltd (上海宏茂) to a consortium of investors led by China’s Tsinghua Unigroup Ltd (清華紫光).

That subsidiary last quarter saw revenue rise 19.8 percent quarterly to NT$272 million, aided by increasing demand from Chinese clients for testing and packaging services for display driver ICs and memory chips, ChipMOS said.

ChipMOS expects the growth momentum to persist on the strength of Tsinghua Unigroup, but did not provide a specific time frame.

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