IMOS

ChipMOS TECHNOLOGIES (Bermuda) LTD. (IMOS)

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ChipMOS Technologies (Bermuda) Ltd. (IMOS)

Q2 2009 Earnings Call

August 19, 2009 7:00 pm ET

Executives

David Pasquale - Global IR Partners

SJ Cheng - Chairman and CEO

SK Chen - CFO

Analysts

Brian Grad - DLS Capital Management

Presentation

Operator

Welcome to the second quarter 2009 Earnings Call. (Operator Instructions)

It is now my pleasure to introduce your host, David Pasquale of the Global IR Partners (sic).

David Pasquale

Welcome everyone to ChipMOS's second quarter 2009 results conference call. Joining us from the company today are S.J. Cheng, Chairman and CEO; and S.K. Chen, Chief Financial Officer. S.J. will review highlights from the quarter and then provide ChipMOS's business outlook. S.K. will then review the company's key performance metrics and the financial results. We'll then have time for any questions.

If you have not received a copy of today's results release, please email Global IR Partners at imos@globalirpartners.com, or you can get a copy of the release off of ChipMOS's website at www.chipmos.com.

Before we begin, we must make a disclaimer regarding forward-looking statements. During this call, management may make forward-looking statements within the meaning of the Section 27A of the US Securities Exchange 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. S.J. Cheng.

S.J. Cheng

Welcome everyone to our 2009 second quarter conference call. Hopefully, you all had time to review our earnings release. Our Q2 revenue was $89.5 million, up 29% from Q1, '09, but down 39% from the same period last year.

Our business experienced significant quarter-over-quarter growth, in line with the broader Q2 recovery in semiconductor industry. We think that growth of business in LCD driver was stronger with continuous weakness in DRAM and flash. Under US-GAAP gross margin was negative 34.2% in the second quarter compared to negative 52.6% in the previous quarter. The gross margin improvement is due to an improvement in capacity utilization rate.

As just noted, we saw a stronger LCD driver business with a rebound of the historical low season in the previous two quarters. We benefit from the demand pick-up in US, China and emerging markets. As a result our LCD revenue in Q2 had around 143% quarter-over-quarter growth and accounted for around 25% of total revenue in Q2 up from around 13% in Q1.

Our mixed signal business grew around 107 quarter-over-quarter in Q2, representing an uptick in demand in the LCD and semiconductor supply chain and the benefit of sales effort in customer bases expansion. Our mixed signal business accounted for around 14% of our total revenue in Q2, up from around 9% in Q1.

In DRAM volume and pricing still remains far behind what we had seen from other products in the semiconductor industry and were behind historical (inaudible). A bright spot in the quarter was the improvement from mixed-DRAM an increase based on delivery business with ProMOS.

Revenue in our flash business declined around 29% in Q2 compared to Q1. This is due to the ongoing impact of the loss of contract business from Spansion, starting from mid of February. We saw some improvement in other flash making market, including our low-flash business with some Taiwan customers.

Looking into the third quarter, we expect that our LCD driver and mixed signal business would continue to improve after the significant growth in Q2. Visibility from customer order has improved and (inaudible) through the end of Q3 in our DRAM business. We are also seeing a more favorable pricing environment in LCD driver backend service in Q3.

In DRAM, the overall market situation in the third quarter is much better than we faced in Q4 '08 and Q1 '09 timeframe. However, we expect the recoveries in the DRAM market were reaming challenging, and will depend on the consolidation activity among DRAM makers and the scale of the capacity investment by then.

We will continue to cross monitor the market and adjust our business if necessary. Our current target is to improve memory capacity utilization by increased business from mixed-signal customers and expand the customer basis of overall DRAM product at the same time.

With regard to our flash business, we still maintained cash on delivery business term we've mentioned in Q3 besides that we expected to see the change of flash revenue contribution by increasing the business of other decreasing customer and by introducing of new customer.

Considering overall market situation and customer bookings, we currently expected high a single-digit percentage revenue growth for the third quarter as compared to the second quarter due to the increased utilization rate and higher ASP for LCD driver business.

Turning to the gross margin, we currently expected gross margin on the consolidated basis for the third quarter of 2009 to be in the range of around negative 25% to negative 32%.The gross margin continue to be impact by lower utilization of DRAM final testing capacity.

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