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ChipMOS Reports Q3

HSINCHU, Taiwan — ChipMOS TECHNOLOGIES (Bermuda) LTD. (“ChipMOS” or the “Company”) (Nasdaq: IMOS) today reported unaudited consolidated financial results for the third quarter ended September 30, 2010. All U.S. dollar figures in this release are based on the exchange rate of NT$31.19 to US$1.00 as of September 30, 2010.

Net revenue on a US GAAP basis for the third quarter of 2010 was NT$4,717.2 million or US$151.2 million, an increase of 4.9% from NT$4,498.4 million or US$144.2 million in the second quarter and an increase of 40.9% from NT$3,347.1 million or US$107.3 million for the same period in 2009.

Net income attributable to ChipMOS on a US GAAP basis for the third quarter of 2010 was NT$51.0 million or US$1.6 million, and NT$0.50 or US$0.02 per basic common share, compared to net loss attributable to ChipMOS of NT$49.7 million or US$1.6 million, and NT$0.51 or US$0.02 per basic common share, for the second quarter. Net income attributable to ChipMOS under US GAAP includes non-cash gain for changes in the fair value of the embedded derivative liabilities of NT$11.5 million or US$0.3 million and amortization of discount on convertible notes of NT$1.5 million or US$0.1 million for the third quarter of 2010, and non-cash loss for changes in the fair value of the embedded derivative liabilities of NT$254.4 million or US$8.2 million and amortization of discount on convertible notes of NT$2.8 million or US$0.1 million for the second quarter. Excluding the above special items regarding the convertible notes, non-GAAP adjusted net income attributable to ChipMOS for the third quarter of 2010 was NT$41.0 million or US$1.4 million, and NT$0.40 or US$0.01 per basic common share, compared to non-GAAP adjusted net income attributable to ChipMOS of NT$207.5 million or US$6.7 million, and NT$2.14 or US$0.07 per basic common share in the second quarter.

S.J. Cheng, Chairman and Chief Executive Officer of ChipMOS, said, “We are encouraged with our results for the third quarter as revenue increased 40.9% on a year over year basis and was 4.9% higher than the prior second quarter of 2010, while our gross margin rebounded to 9.3% in 3Q10 compared to 5.2% in 2Q10. We continue to benefit from our business and customer diversification efforts into higher margin opportunities, including flash, with Mask ROM, which achieved 26.6% revenue growth compared to 2Q10, and our LCD driver business, with gold bumping, which had 10.4% revenue growth compared to 2Q10. Reflecting broader market trends, moderate growth seen in July and August in our DRAM and mixed-signal businesses, was followed by softer demand in September from the large-screen LCD TV and corporate PC replacement market segments. The overall driver IC business appears to have bottomed and is improving going into 4Q10. Separately, demand for our chip-on-glass (COG) and gold bumping services remained strong through the end of the third quarter. The demand was led by applications, including tablet computers and smartphones, where average capacity utilization was running at approximately 88% in 3Q10.”

S.K. Chen, Chief Financial Officer of ChipMOS, said, “We continue to focus on profitable revenue opportunities, cost controls, margin expansion, disciplined CapEx practices and debt reduction. While we have been running near full utilization levels, the blended rate showed a decline to 77% in 3Q10 from 81% in 2Q10. This is solely due to the additional capacity recently brought online from our strategic transaction with SPIL. This additional capacity is essential to support customer demand levels, especially in our LCD driver business. The transaction also allowed us to preserve our cash levels while we replaced certain DRAM test capacity. Our announced niche/mobile DRAM- focused strategy further helped us in the quarter to maintain memory test capacity utilization at around 80%. Our balance of cash and cash equivalents improved to US$175.8 million as of September 30, 2010. This does not include the US$67.8 million from the settlement of our breach of contract damage claim with Spansion, which was received on October 13, 2010. We intend to now reduce our total debt by approximately US$100 million in 4Q10, followed by a further reduction of approximately US$110 million to US$120 million in 2011. This will materially reduce our debt servicing costs, improve our operating cash flow and margins, while also significantly improving the Company's financial strength.”

{complink 12843|ChipMOS Technologies (Bermuda) Ltd.}

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