Taiwanese test and assembly house ChipMOS Technologies Ltd. said today that it's Q1 unaudited consolidated revenues decreased 9 percent on a sequential basis, but still climbed 8 percent year over year.

ChipMOS posted Q1 revenue of $106 million (3.3 billion new Taiwanese dollars), compared to $117 million (3.7 billion NT) in Q4 2004, and $98 million (3 billion NT) in Q1 2004.

Net income for the quarter was $6 million (174 million NT), or 8 cents (2.58 NT) per common share. On a consolidated basis, Q1's gross margin was 20 percent, compared to 36 percent in Q1 2004 and 23 percent in Q4 2004.

"Our gross margin for the first quarter ended March 31, 2005 remained strong at 20 percent primarily due to higher sales volumes and our ability to more efficiently leverage our cost structure," S.K. Chen, CFO, said in a statement. "Our gross margin was partially offset by a higher cost of revenue and the effect of consolidating the financial results of Chantek (Chantek Electronic Co. Ltd.).

S.J. Cheng, chairman and CEO recounted the company's economic drivers for the quarter. "Demand for memory testing remained high while demand for mixed-signal assembly and testing was lower," Cheng said in a statement. "In addition, we continued to strategically reduce our turnkey business excluding our module business," he said.

CFO Chen noted the company's operating cost declined in the quarter. "Total operating expenses in the first quarter of 2005 declined to $8 million or 7 percent of revenue, compared to $16 million or 14 percent of revenue in the prior fourth quarter, but increased compared to $6 million or 7 percent of revenue in the first quarter of 2004," Chen said.

"We also remained conservative in our capital expenditures. Capex spending for the first quarter of 2005 was $32 million compared to $76 million in the prior fourth quarter. We currently expect to maintain our conservative capex budget through 2005.

"Finally, our balance of cash and short-term investments was $152 million at the end of the first quarter, giving the liquidity necessary for our business operations," Chen continued. "The sequential decline in our cash and short-term investments balance was due to our use of approximately $81 million to repay bank loans and bonds in the first quarter."

ChipMOS said it was bullish on the near-term outlook. "We are currently optimistic about the outlook for the second quarter of 2005 based on our business fundamentals, current market conditions, improved inventory levels and anticipated customer programs," CEO Cheng said. "We currently expect that improving business trends witnessed in the first quarter will continue into the second quarter, allowing us to return to revenue and profit growth.

"For the second quarter of 2005, we currently expect total net revenue will be in the range of $115 million to $119 million," he said.

ChipMOS larger rival ASE reported calendar Q1 earnings late last month. While it was still in the red, it also suggested that business would improve, although it doesn't see a ramp beginning until Q3.

By: DocMemory
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