ChipMOS Technologies (ticker: IMOS) had a strong performance in the second quarter of 2024, with significant increases in revenue and net earnings. The semiconductor company reported a 7.2% quarter-over-quarter revenue growth and a 6.7% rise compared to the same period last year. Despite higher operating costs, including increased electricity and material costs, as well as higher salary expenses, the company managed to maintain its gross margin. ChipMOS is preparing for a stronger second half of the year with strategic investments in memory test platforms and capacity expansion, focusing on high-growth and high-margin areas like automotive panel and OLED testing. The company also distributed a dividend of TWD1.8 per common share to shareholders.
Key takeaways from ChipMOS’s second-quarter performance include a 7.2% increase in revenue quarter-over-quarter, a rise in net earnings to TWD0.62, and strong performance in assembly, mixed-signal, and memory testing, as well as wafer bumping. The company announced investments in memory test platforms and DDIC capacity expansion. Despite higher costs, the gross margin remained flat. ChipMOS expects a stronger second half of 2024 with a focus on high-growth, high-margin areas.
Looking ahead, ChipMOS anticipates a stronger second half with improved operating momentum and end markets. The company aims to maintain a 47:53 revenue ratio between the first and second halves of the year and improve margins in the latter half. Investments are being made in areas expected to yield higher growth and margins.
While free cash flow decreased due to increased capital expenditures, ChipMOS saw revenue increases in the automotive and industrial segments, as well as significant growth in TV panel demand. The company is optimistic about the second half of 2024 based on customer feedback. Smartphone-related demand, however, remained flat.
During the earnings call, management addressed concerns about increased operating costs and outlined strategies to improve the cost structure. They expressed confidence in maintaining a competitive edge through superior OSAT products and services and emphasized their focus on high-end product penetration and meeting quality requirements of European and American brands.
In conclusion, ChipMOS Technologies’ strong performance and strategic focus on expansion and investment in key growth areas position the company well in the competitive semiconductor industry landscape. With a commitment to shareholder returns and an optimistic outlook for the latter half of the year, ChipMOS is navigating the industry effectively. We are dedicated to strategically expanding our capacity, enhancing our leadership position, and creating lasting value for our shareholders by prudently allocating capital and focusing on high-return opportunities. In the second quarter of 2024, our revenue grew by 7.2% compared to the first quarter, and by 6.7% year-over-year. Gross profit increased by 5.8% from the first quarter, with a stable gross margin. Our net earnings per share for the second quarter were TWD0.62, up from TWD0.60 in the previous quarter, and the accumulated EPS for the first half of 2024 is TWD1.22.
Our overall utilization rate improved to 69% in the second quarter of 2024, reflecting increased business activity and seasonal trends. Various segments such as assembly, testing, DDIC, and bumping also showed positive growth. In terms of revenue breakdown, assembly, mixed-signal and memory testing, and wafer bumping were key contributors. Our DDIC and gold bumping products were significant revenue drivers, with memory products showing steady growth.
In terms of end markets, automotive and industrial sectors saw a notable increase in revenue, while TV panel demand surged. Smartphone-related revenue remained stable, and computing revenue showed growth. We also saw strong performance in the consumer segment. Overall, our financial results for the second quarter of 2024 demonstrate our commitment to sustainable growth and value creation for our stakeholders. Based on the information provided in the Referencing presentation, the consolidated statements of financial position as of the end of 2Q ’24 showed total assets of TWD45,435 million, total liabilities of TWD20,919 million, and total equity of TWD24,516 million. The accounts receivable turnover days were 85 days, and inventory turnover days were 49 days in 2Q ’24.
In terms of the consolidated statements of cash flows, as of June 30, 2024, the balance of cash and cash equivalents was TWD14.652 billion. The net free cash inflow for the first half of 2024 was TWD1,433 million, compared to TWD1,950 million for the same period in 2023. The decrease was primarily due to a TWD486 million increase in CapEx and a TWD42 million reduction in depreciation expenses.
Regarding capital expenditures and depreciation, TWD858 million was invested in CapEx in Q2, with the breakdown showing 4.3% for bumping, 44.7% for LCD driver, 28.7% for assembly, and 22.3% for testing. Depreciation expenses were TWD1,184 million in Q2.
As of July 31, 2024, the company’s outstanding ADS number was approximately 4.2 million units, representing around 11.6% of the company’s outstanding common shares.
Looking ahead, the company’s outlook for Q3 is cautiously optimistic, with expectations of improved market conditions and operating momentum in the second half of 2024. The company plans to make strategic investments in memory test platforms and DDIC capacity expansion to support growth in high-growth, high-margin product areas. Additionally, efforts to reduce operating costs, improve profit, and maintain a competitive advantage are ongoing.
In terms of competition, including from China, the company remains focused on supporting customers and is confident in its position within the industry. Our primary focus is on delivering a top-notch OSAT product and service. We are dedicated to enhancing our quality, operations, and competitiveness. This involves increasing the market share of premium products like OLED, automotive panels, and high-end TVs to uphold our competitive edge. Furthermore, we anticipate benefiting from the heightened quality standards required by European and American brands.
Operator: Thank you. There are no further questions in the queue. I will now hand the call back to G. S. Shen.
GS Shen: That wraps up our question-and-answer session. Thank you for your participation. I will now pass the floor back to Mr. S.J. Cheng for any closing remarks.
SJ Cheng: Thank you to everyone who joined our conference call. If you have any additional questions, please reach out to our IR team via email. We value your support. Goodbye.
Operator: Ladies and gentlemen, this marks the end of today’s conference call. Thank you for your participation. You may now disconnect.
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