Business context and reporting period
ChipMOS TECHNOLOGIES INC. is a Taiwan-based provider of semiconductor assembly, testing and bumping services, including services for memory, logic/mixed-signal and display-driver semiconductors. This Form 20-F, filed April 14, 2022, reports the fiscal year ended December 31, 2021, with comparisons to 2020 and 2019; it is not a standalone fourth-quarter filing, and the provided text does not give clear Q4-only financial results. Financial statements are prepared under IFRS as issued by the IASB and presented primarily in New Taiwan dollars (NT$).
Financial results and key metrics
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | NT$27,400 million (US$988 million), up 19% | NT$23,011 million |
| Gross profit / margin | NT$7,254 million / 26.5% | NT$5,032 million / 21.9% |
| Operating profit / margin | NT$5,562 million / 20.3% | NT$3,567 million / 15.5% |
| Profit attributable to equity holders | NT$4,937 million (US$178 million); basic EPS NT$6.79 | NT$2,379 million; basic EPS NT$3.27 |
| Net cash from operating activities | NT$7,320 million | NT$5,940 million |
| Capital expenditure | NT$6,553 million | NT$4,134 million |
All four service segments grew in 2021: testing revenue rose 18% to NT$5,900 million; memory and logic/mixed-signal assembly rose 33% to NT$7,964 million; display-driver assembly and testing rose 17% to NT$8,211 million; and bumping rose 7% to NT$5,326 million. Utilization improved year over year across testing, assembly, display-driver services and bumping, reaching 83%, 85%, 80% and 85%, respectively.
At year-end, cash and cash equivalents were NT$5,906 million, current assets NT$16,485 million and current liabilities NT$7,409 million. Bank borrowings totaled approximately NT$10,145 million, including NT$732 million of short-term loans; NT$7,654 million of long-term borrowings were secured. Cash exceeded short-term bank loans, but not total bank debt. Total liabilities were NT$18,380 million, and the liabilities-to-assets ratio increased to 43.2% from 41.0%.
Material changes versus the prior comparable period
Revenue growth, higher average selling prices and stronger demand lifted gross profit by 44% and expanded gross margin by 4.6 percentage points. Operating profit increased 56%; net profit more than doubled, also reflecting a swing in the share of results from associates and joint ventures—from a NT$147 million loss in 2020 to NT$626 million of profit in 2021. Lower foreign-exchange losses and interest expense also improved non-operating results. Income tax expense increased to NT$1,098 million from NT$594 million.
Operating cash flow increased by NT$1,379 million. Investing cash outflow widened to NT$6,015 million, chiefly as property, plant and equipment purchases rose. Financing cash flow turned positive at NT$494 million, reflecting net borrowing, partly offset by NT$1,600 million of cash distributions to shareholders. Inventory increased by NT$1,105 million during 2021.
Outlook, commentary and risks
The filing provides no formal quantitative earnings or revenue guidance. Management described continuing semiconductor capacity constraints into 2022, including at wafer foundries, in raw materials and in outsourced assembly and testing. It cited work-from-home demand, 5G-related products, display drivers and automotive semiconductors as relevant market drivers, while noting uncertainty around demand and supply conditions. A long-term capacity agreement for high-end wafer testing tied to OLED and other display-driver demand in 2022 was reached in late 2021. Planned research priorities include advanced bumping, fine-pitch COF and packaging technologies; 2021 R&D spending was 4.2% of revenue.
Key risks include semiconductor cyclicality and pricing pressure; high fixed costs and the need to sustain utilization; reliance on a limited number of customers (the top five contributed 57% of 2021 revenue); supply and equipment availability; substantial debt and floating-rate exposure; foreign-exchange movements; COVID-19 and other operational disruptions; Taiwan–China geopolitical tensions; and potential constraints on PCAOB inspection of audit work relating to the PRC associate. The company reported no material litigation, significant disaster loss, off-balance-sheet arrangements or significant events after the reporting period. Management and the auditor concluded internal control over financial reporting was effective at December 31, 2021. The auditor identified revenue recognition estimates for assembly, display-driver and bumping services as a critical audit matter.
Most important facts for investors to verify
- Confirm the reported annual results and obtain separate quarterly disclosures before drawing conclusions about Q4 2021 performance.
- Assess whether 2021’s utilization, selling-price and margin improvements persisted, and how much depended on tight industry capacity.
- Review the sustainability and cash realization of the NT$626 million equity-method profit, including the underlying associate results.
- Track working-capital needs, capital spending, collateralized debt, loan maturities and covenant compliance; management said available liquidity should cover needs for one year after issuance, subject to economic uncertainty.
- Evaluate customer concentration, supplier constraints, geopolitical and foreign-exchange exposure, and the PCAOB-inspection risk disclosed for the PRC associate.