ChipMOS Technologies Q2 Profit Down 53%; To Buy Stake In JMC Electric

(RTTNews) - ChipMOS Technologies Bermuda Ltd. (IMOS), a provider of semiconductor assembly and testing services, on Tuesday reported a 53 percent decline in profit for the second quarter from last year, as higher expenses and the accrual of a foreign exchange loss offset an increase in revenues.

Looking ahead, the company expects a sequential increase in revenues for the third quarter, and declared an annual cash dividend of $0.14 per share.

ChipMOS also said it has agreed to acquire a 19 percent stake in JMC Electric Corp. Ltd., a provider of flexible organic substrate for LCD driver semiconductors, and plans to buy back 1 million of its own shares from Siliconware Precision Industries Co. Ltd.

The company's majority-owned subsidiary, ChipMOS Taiwan, is listed on the Taiwan stock exchange.

Second-quarter net income attributable to equity holders of the company was $5.7 million or $0.19 per share, down from $12.0 million or $0.40 per share in the comparable quarter last year.

The latest quarter's results were negatively impacted by the accrual of foreign exchange loss of $4.0 million or $0.13 per basic share. In addition, the results reflect the impact of a $0.8 million increase in administrative and general expenses as well as $0.2 million increase in other operating expenses.

However, revenue for the quarter grew 10 percent to $181.2 million from $165.4 million in the prior-year quarter.

ChipMOS noted that its memory business benefitted from stronger customer demand in the quarter and expects this business momentum to continue in second half of 2014.

However, demand in the company's LCD driver business softened slightly entering June, which resulted in the lower utilization of our LCDD capacity and also impacted revenue in the second quarter. The company expects demand in the LCDD business to improve, led by the growth in UHD TVs.

Looking ahead, ChipMOS expects revenue for the third quarter to increase about 3 percent to 7 percent as compared to the preceding second quarter.

ChipMOS said its board of directors has authorized an upward revision of its full-year 2014 CapEx budget to about $110 million from the prior forecast of about $80 million.

ChipMOS also declared an annual cash dividend of $0.14 per share, payable on October 30, 2014 to all common shareholders of record at the close of business on October 16, 2014.

Separately, ChipMOS said it has agreed to acquire a 19 percent stake in JMC Electric Corp. Ltd., which is 100 percent owned by Chang Wah Electromaterial Inc., or CWE. The company expects the non-material, all cash transaction to close by the end of August 2014.

JMC is a provider of flexible organic substrate for LCD driver semiconductors, known as chip-on-film or COF tape, with manufacturing technology that originated from Sumitomo Metal Mining Co., Ltd., Japan.

JMC currently has capacity of 36 million pieces per month for COF tape, with plans to expand capacity to 50 million pieces per month in 2015. Based in the Nan-Tzu Export Processing Zone, Kaohsiung, Taiwan, JMC's operation is about 45 kilometers from ChipMOS' Tainan fab in Southern Taiwan.

In a separate statement, ChipMOS said its board of directors has approved the repurchase of 1 million shares, or 3.3 percent ownership of its outstanding shares, held by Siliconware Precision Industries Co., Ltd. or SPIL.

Based on shareholding information as of June 30, 2014, upon consummation of the proposed repurchase transaction, SPIL would hold 1.24 million shares or a 4.2 percent stake in ChipMOS, and 132.78 million shares or a 15.4 percent stake in its majority-owned subsidiary, ChipMOS Technologies Inc.

ChipMOS expects to enter into a share purchase agreement with SPIL prior to the end of August 2014. The transaction is expected to be consummated before the end of September 2014.

IMOS closed Tuesday's regular trading session at $24.47, up $0.14 or 0.58 percent on a volume of 162,924 shares. In after-hours, the stock declined $0.25 or 1.01 percent to $24.22.