Net revenue on a US GAAP basis for the first quarter of 2011 was NT$4,469.6 million or US$152.0 million, an increase of 3.4% from NT$4,322.6 million or US$147.0 million in the fourth quarter of 2010 and an increase of 21.7% from NT$3,671.5 million or US$124.9 million for the first quarter 2010.

Net loss on a US GAAP basis for the first quarter of 2011 was NT$118.7 million or US$4.0 million, and NT$4.61 or US$0.16 per basic common share, compared to net income of NT$1,346.8 million or US$45.8 million, and NT$52.39 or US$1.78 per basic common share, for the fourth quarter of 2010. Net loss under US GAAP includes non-cash loss for changes in the fair value of the embedded derivative liabilities of NT$62.0 million or US$2.1 million and amortization of discount on convertible notes of NT$1.1 million or US$0.1 million for the first quarter of 2011 and non-cash loss for changes in the fair value of the embedded derivative liabilities of NT$12.2 million or US$0.4 million and amortization of discount on convertible notes of NT$1.6 million or US$0.1 million for the fourth quarter of 2010. Excluding the above special items regarding the convertible notes, non-GAAP adjusted net loss for the first quarter of 2011 was NT$55.6 million or US$1.8 million, and NT$2.16 or US$0.07 per basic common share, compared to non-GAAP adjusted net income of NT$1,360.6 million or US$46.3 million, and NT$52.93 or US$1.80 per basic common share in the fourth quarter of 2010.

The unaudited consolidated financial results of ChipMOS for the first quarter ended March 31, 2011 included the financial results of ChipMOS TECHNOLOGIES INC., ChipMOS U.S.A., Inc., MODERN MIND TECHNOLOGY LIMITED and its wholly-owned subsidiary ChipMOS TECHNOLOGIES (Shanghai) LTD., and ThaiLin Semiconductor Corp.

S.J. Cheng, Chairman and Chief Executive Officer of ChipMOS, said, "Our first quarter revenue and gross margin results are in line with expectations, with net revenue at nearly 22% higher on a year over year basis and improving gross margins of 7.6% in Q1 2011 as compared to 5.9% in Q4 2010. Demand in our LCD driver business, including gold bumping, and assembly services for niche/mobile DRAM and flash, remained strong through the end of the quarter. This strength was led by increased demand for serving applications, including hard disc drives, tablet computers and smartphones, where our average capacity utilization increased to approximately 77% in 1Q11. We are fortunate to note that our supply chain has remained insulated from disruptions caused by the terrible earthquake and tsunami in March 2011, and our thoughts continue to be with the people of Japan and our partners there."

S.K. Chen, Chief Financial Officer of ChipMOS, said, "Our blended utilization rate improved to 77% compared to 68% in the prior quarter, reflecting higher capacity utilization in our LCD driver and assembly segments. Going forward, we see considerable room for gross margin improvement as our utilization rate further increases due to the success of our business diversification, and increasingly favorable revenue mix. Other than the non-cash loss from the changes in the fair value of the embedded derivative liabilities and amortization of discount on convertible notes mentioned above, the net loss in the quarter was also the result of a loss we incurred on the sale of our interest in ChipMOS Taiwan to Siliconware Precision Industries Co., Ltd., of approximately NT$74.9 million or US$2.5 million. As of today's date, we have no outstanding convertible debt, thereby eliminating any further potential related non-cash losses. We also expect to realize the benefits from our corporate restructuring activities, which we believe should translate into sustainable margin and profitability improvements over the near period and beyond. In addition, we further reduced the company's balance of total debt by an additional US$31 million in the first quarter of 2011, while maintaining a strong balance of cash and cash equivalents at US$194.1 million as of March 31, 2011. We look forward to further debt reductions each quarter as generate positive cash from operations throughout 2011."

    Selected Operation Data

                                       1Q11             4Q10
                                       ----             ----
    Revenue by segment
       Testing                                      34%               36%
       Assembly                                     32%               33%
       LCD Driver                                   34%               31%

    Utilization by segment
       Testing                                      62%               60%
       Assembly                                     82%               72%
       LCD Driver                                   88%               72%
       Overall                                      77%               68%

    CapEx                              US$28.0 million  US$36.6 million
       Testing                                      12%               37%
       Assembly                                     13%               11%
       LCD Driver                                   75%               52%

    Depreciation and amortization
     expenses (US GAAP)                US$49.0 million  US$52.7 million

Second Quarter 2011 Outlook

The Company expects single digit revenue growth for the second quarter 2011 as compared to the first quarter of 2011, while maintaining gross margin on a consolidated basis in the range of 7.0% to 12.0%.

Mr. Cheng continued, "We entered the second quarter with a positive outlook. We are benefiting from growth opportunities at existing customers and seeing an increased number of new opportunities in our LCD driver business, gold bumping and niche/mobile DRAM segments. There does not appear to be any slow down in mobile application related demand and we expect the trend will continue. Overall, we expect the demand stability we are seeing in Q1 in our LCD driver business and in our niche/mobile DRAM segments will offset anticipated macro weakness in the flash and mixed-signal segments. We expect our ongoing cost reduction efforts will help us maintain our gross margin levels by offsetting increased material costs, including gold, silver, copper, components and exchange rate fluctuations. Importantly, we expect to benefit from higher demand in the second half of 2011 than in the first half of the year led by seasonality, currently low inventory levels, ramp of new business and the addition of new capacity."

By: DocMemory
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