ChipMOS Technologies Inc , a packaging and testing service provider for memory chips and LCD driver ICs, yesterday reported that net profit tumbled 73.4 percent annually last quarter due to order cuts by its major DRAM client, Micron Technology Inc.

Net profit plunged to NT$163 million (US$5.58 million) from NT$613.9 million the previous year, with earnings per share (EPS) dipping to NT$0.19 from NT$0.72.

On a quarterly basis, net profit inched up 0.2 percent from NT$162 million.

Gross margin fell to 17 percent from 20.6 percent a year ago and from 17.2 percent a quarter earlier.

The company has since last year been stepping up efforts to broaden its technology portfolio and offer higher-margin packaging and testing services for NOR flash memory chips and sensors used in automotive and industrial devices, as well as for driver ICs used in high-resolution OLED panels.

“The product diversification efforts should bring new business opportunities and growth momentum from the second and third quarter, which should help offset order cuts from our major DRAM client,” ChipMOS chairman S.J. Cheng told investors.

Thanks to robust demand from the automotive segment and industrial devices, the company’s NOR flash memory chip packaging and testing service is running near full capacity and the production constraint is expected to extend through the whole year, he said.

To cope with the growing demand from memorychip makers, ChipMOS said its Chinese unit — ChipMOS Technologies (Shanghai) Ltd — would focus on expanding capacity for packaging and testing services for memory chips, rather than driver ICs.

With contributions from these new services increasing, Cheng expects revenue to start picking up next month.

Revenue from automotive chips and industrial devices accounted for 10 percent each of the firm’s total revenue of NT$4.41 billion last quarter, with both divisions expected to expand their sales proportion this year, Cheng said.

Contribution from packaging and testing services for OLED is forecast to become significant in the second, the company said.

For the full year, ChipMOS made NT$3.03 billion in net profit, nearly doubling from NT$1.53 billion in 2016, due to gains from selling a 52 percent stake in its Shanghai unit to a consortium of investors led by China’s Tsinghua Unigroup Ltd . EPS jumped to NT$3.5 from NT$1.76.

The company said its board has approved a cash dividend distribution of NT$0.3 per common share and given the go-ahead to a 15 percent reduction in share capital to boost return on equity, allowing it to return cash of NT$1.5 per share to shareholders.

By: DocMemory
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