ChipMOS Cautious About H2 Revenue as Industry Pauses Amid US Tariff Doubt and Waning Front-loading Demand
Second half of the year anticipated to be tranquil for ChipMOS due to customer apprehension regarding tariffs
In a sobering announcement yesterday, chip packaging and testing service provider ChipMOS Technologies Inc (南茂科技) expressed cautious optimism for the second half of 2021 due to emerging uncertainty from US tariff implications and waning front-loading demand in the electronics sector.
ChipMOS chairman Cheng Chih-chieh (鄭世杰) articulated, "We're keeping aclose eye onwhether the initial demand surge in Q1 and Q2 will carry over to the latter half of the year."
When pressed for clarification on potential revenue reductions in the second half of the year, Cheng diplomatically kept his cards close, saying, "I can't make any definitive statements yet." Back in Q1, the company had expressed hope for a stronger second half than the first.
The usual revenue surge ChipMOS experiences in the second half of a year, based on electronic sector patterns, may not materialize this time. Tension in the industry arises as the whole supply chain waits to see how the situation unfolds after the 90-day tariff truce ends. With customers adopting a conservative stance, a clear industry picture is hard to discern.
In the previous quarter, ChipMOS' net profit plummeted 60% to NT$176.3 million (US$5.79 million) compared to NT$437.8 million a year ago, and dropped 24% from NT$232.2 million in the previous quarter. Gross margin dipped to 9.4%, compared to 14.2% last year and 9.5% in the preceding quarter, with earnings per share settling at NT$0.24, down from NT$0.6 in the same period last year and NT$0.32 in the previous quarter.
Revenue nudged up 2% to NT$5.53 billion from NT$5.42 billion a year prior, increasing 2.5% from NT$5.4 billion in the previous quarter, thanks to rush orders from customers, the company explained.
The memorychip segment is expected to witness stronger growth momentum than display driver ICs this quarter and in H2, owing to a DRAM price rebound and escalating demand for flash memory chips used in AI devices. However, the outlook for display driver ICs remains unclear, according to Cheng.
To boost factory utilization, ChipMOS aims to enhance its plant operation rate this quarter, following an improvement to 62% last quarter from 59% in the preceding one. The company will also exercise financial caution in its capital spending for 2021 to minimize depreciation expenses.
In 2021, the semiconductor industry grappled with challenges such as US tariff uncertainty and variations in demand due to front-loading. ChipMOS, like many other companies in the space, could have faced similar impacts. For quantifiable details on ChipMOS' revenue predictions in H2 2021 or particular insights from 2021, historical financial reports or industry analyses would be instrumental.
Meanwhile, the company's board of directors has approved a new share buyback plan to bolster the stock price. The initiative involves repurchasing15 million common shares by July 13.
In light of the uncertainty surrounding US tariffs and waning front-loading demand in the electronics sector, discussions about the finance sector, specifically ChipMOS Technologies Inc's revenue for the second half of 2021, have become more cautious. This caution extends to the technology industry, as the memory chip segment, while expected to witness stronger growth, still faces uncertainty with the outlook for display driver ICs remaining unclear.
