Fri, Nov 10, 2017 - Page 12 News List

ChipMOS Technologies profit sinks after major client Micron pulls back on orders

By Lisa Wang  /  Staff reporter

ChipMOS Technologies Inc (南茂), a packaging and testing service provider for LCD driver ICs and memory chips, yesterday posted an annual decline of 34.5 percent in net profit for last quarter, as its major DRAM client, Micron Technology Inc, continues to cut orders.

Net profit dropped to NT$162 million (US$5.37 million) last quarter, compared with NT$255.1 million in the third quarter last year, the company’s statement showed.

That represented a quarterly contraction of about 50 percent from NT$321.4 million.

Gross margin fell to 17.2 percent, from 20.1 percent a quarter earlier and 20.3 percent a year earlier, partly due to electricity shutdowns, the company said.

ChipMOS said it expects Micron to scale down orders next year as the US memory chipmaker is allocating DRAM chip testing and packaging orders to multiple suppliers in a strategy shift.

However, ChipMOS did make progress in minimizing the impact by diversifying its business scope to provide testing services for driver ICs used in flat panels, company chairman S.J. Cheng (鄭世杰) told investors.

Revenue from driver IC testing grew 7.1 percent quarter-on-quarter last quarter, supported by increasing demand for 4K ultra-high-definition LCD TVs and smartphones, Cheng said.

The company has also secured some major clients from South Korea to provide its gold bumping testing service for driver ICs used in advanced organic LED displays (OLED), Cheng said.

“We have started offering gold bumping services for OLED displays, which has reflected in our strong growth in gold bumping business in the third quarter [this year],” Cheng said. “We expect [testing revenue] contribution from OLED displays to be more evident in the first quarter of next year, as some clients enter the qualification process.”

Cheng did not disclose names of those clients, but the Chinese-language United Evening News last week reported that the company had clinched exclusive orders from Samsung Electronics Co.

“Demand for niche DRAM and NOR flash memory chips remains very strong, as indicated by customers’ feedback and recent market situation,” Cheng said of the outlook for this quarter.

The growth is expected mainly from rising demand in automotive electronics, small-sized OLED displays and image identification sensors for smartphones, he said.

Cheng said he is optimistic about revenue growth from the driver ICs segment, considering the climbing penetration rate of 4K LCD TVs.

The launch of new smartphones by major vendors, which are equipped with an 18:9 aspect ratio screen, would also fuel demand for better-margin testing and packaging services for display driver ICs, he said.

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