ChipMOS(IMOS) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2022, ChipMOS reported revenue of NT$6,852 million, a 1.9% increase from Q1 2022 and a 1.9% decrease year-over-year [5][11] - Gross margin improved by 40 basis points to 25.4% compared to Q1 2022 [5][11] - Net earnings were NT$1.82 per share, with a first half EPS of NT$3.50, reflecting a 14% year-over-year increase [6][11] - Operating expenses were NT$485 million, representing 7.1% of total revenue, a 3.9% improvement from Q1 2022 [11][12] - Total assets at the end of Q2 2022 were NT$43,037 million, with total liabilities of NT$19,262 million and total equity of NT$23,775 million [13] Business Line Data and Key Metrics Changes - Assembly accounted for 28% of Q2 revenue, testing for 22%, and wafer bumping for 19% [7] - Driver IC-related revenue was about 48.8% of total Q2 revenue, with DDIC products contributing approximately 32% [9] - Memory product revenue was up 1.5% from Q1 2022 but down 7.7% year-over-year, representing 40.5% of total Q2 revenue [7][8] Market Data and Key Metrics Changes - Revenue from automotive and industrial sectors represented about 19.7% of Q2 revenue, growing over 20% from Q1 [9] - Smartphone and TV markets accounted for 27.2% and 17.8% of Q2 revenue, respectively [9] - Flash revenue decreased by 1% compared to Q1 and was down about 19% year-over-year [8] Company Strategy and Development Direction - The company is focusing on long-term growth markets and is conservative on business outlook due to macroeconomic challenges [17] - CapEx investments are being restrained to reduce depreciation pressure and maintain utilization levels [17][18] - Participation in a government incentive program aims to extend manufacturing facilities and invest in AI and automation [19] Management Comments on Operating Environment and Future Outlook - Management acknowledged challenges from global inflation and consumer electronics softness impacting inventory levels [21] - A conservative view is taken for Q3 revenue, expected to be lower than Q2 [22] - Long-term demand growth is anticipated, particularly in memory products and automotive displays [18][19] Other Important Information - Free cash flow for the first half of 2022 was NT$2,321 million, an increase from NT$1,768 million in the same period of 2021 [14] - CapEx for Q2 was NT$1,401 million, with a forecast of around 20% of annual revenue for 2022 [15][25] Q&A Session Summary Question: Can you elaborate on the DDIC business correction and its duration? - Management indicated that the DDIC segment is experiencing a correction due to macroeconomic factors, with expectations for revenue to decline in Q3 [21][22] Question: What details can you provide about the new DRAM products and DDR3 volume? - Management mentioned better visibility for DDR3 and referred to mass production for advanced DRAM technology [24] Question: What are the expectations for CapEx and depreciation in 2022? - CapEx is expected to be near 20% of annual revenue, with Q2 depreciation around NT$1,197 million and Q3 and Q4 expected to be around NT$1.2 billion [25]