IMOS

ChipMOS TECHNOLOGIES (Bermuda) LTD. (IMOS)

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ChipMOS Technologies (Bermuda) Ltd. (IMOS)

Q2 2008 Earnings Call

August 20, 2008 7:00 pm ET

Executives

Joseph Villalta - The Ruth Group

SJ Cheng - Chairman and CEO

SK Chen - CFO

Analysts

Peter Kim - Deutsche Bank

Rafi Hassan - FBR

Brian Grad - DLS Capital Management

Tom Saberhagen - Aegis Financial Corporation

Presentation

Operator

Greetings and welcome to the ChipMOS Bermuda Ltd. Second Quarter 2008 Results Conference Call. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Villalta, of the Ruth Group. Thank you. You may begin.

Joseph Villalta

Thank you, operator. Welcome everyone to ChipMOS's second quarter 2008 results conference call. Joining us from the company are SJ Cheng, Chairman and CEO; and SK Chen, CFO. SJ will review highlights from the quarter and then provide ChipMOS's business outlook. SK will then review the company's key performance metrics and financial results. We'll then have time for any questions.

If you have not received a copy of today's results, please call the Ruth Group at 646-536-7026, or you can get a copy of the release at ChipMOS's website at www.chipmos.com.

Before we begin, we must take a disclaimer regarding forward-looking statements. Before this call, management may make forward-looking statements within the meaning of the Section 27A of the US Securities Act of 1933 as amended, and the section 21E of the US Securities Exchange Act of 1934 as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual performance, financial condition or results of operations of the company to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in the company's most recent annual report on Form 20-F filed with the US Securities and Exchange Commission, and in the company's other filings with the SEC.

Let me now turn the call over to Mr. SJ Cheng. Please go ahead sir.

SJ Cheng

Thank you, Joseph. Welcome everyone to our 2008 second quarter conference call. Hopefully, you all had time to review our earnings release. Q2 revenue was $158.7 million, which is an increase of 0.8% over Q1 '08 and a decrease of 17.4% year-over-year. Under US GAAP, the growth margin decreased to 7.2% in the second quarter from 9.1% in the first quarter, reflecting lower capacity utilization in the final testing for DRAM and Flash products, as well as price erosion of DRAM business.

Our DRAM business continued to be weak in the second quarter. DRAM revenue [has given us] 1% sequential growth in Q2 primarily contributed from assembly manufacturing due to the unit volume increases. However, the price erosion offset the revenue growth coming from unit volume growth. DRAM testing requirements remained limited in the second quarter. Our LCD driver revenue had 3% quarter-over-quarter growth in Q2, reflecting a quick but (inaudible) recovery in demand from our customer.

However, our gold bumping business had a good revenue in Q2, as a result of a increase in the customer base. Our gold bumping revenue increased around 25% in Q2, as compared to Q1.

Flash revenue in Q2 declined 7% quarter-over-quarter and contributed around 29% of our total revenue in Q2, down from 32% in Q1. The decline in flash revenue was primarily due to the seasonal adjustment from our unauthorized customers.

Including our flash revenue, Mask ROM business from our major flash customer in Taiwan had better growth potential. Revenue from Mask ROM had around 10% of quarter-over-quarter growth in Q2, and currently contribute around 7% of our flash revenue.

Mixed-signal in our business is another growing segment among our product mix. Mixed-signal revenue had around 11% of quarter-over-quarter growth in Q2, and currently contributes around 8% of our total revenue.

Looking into the third quarter, the visibility of DRAM and flash market demand is limited, and we said our DRAM business is not recovering to the last year's labor. Reflecting slower (inaudible) from DRAM maker and lower market price, due to the weaker than expected PC demand in the second half of this year.

In addition, continuous ASP pressure in the (inaudible) will be another key factor on our DRAM business performance in Q3.

For LCD driver business, customers tend to (inaudible) in order to adjust the inventory level in response to lower than expected panel demand in the second half of this year. However, we will notice better demand from our customers in Q4 as compared to Q3. In addition, gold bumping business will maintain its growth momentum in the second half, due to the new customer programs.

On the flash side, growth of Mask ROM business will continue in Q3 based on the strong demand on our customer products. We expect to see (inaudible) growth of Mask ROM business in the second half of this year. The new business development in mixed-signal segment is another key program for ChipMOS in year 2008, with increased customer base in (inaudible) segment. Mixed-signal business is expected to maintain its growth in the second half.

Considering the overall market situation, the product segment, we currently expect the Q3 revenue to be in the range of $149 million to $159 million, which is around 6% down to flat as compared to Q2. The revenue forecast is based on the exchange rate of NT$30.36 against $1 as of June 30, 2008. The reported Q3 revenue in US dollar basis may vary from the guidance due to the different exchange rates at end of Q3.

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