ChipMOS TECHNOLOGIES INC. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023; filed April 11, 2024. This is an annual report, not a standalone Q4 filing. Financial statements are prepared under IFRS as issued by the IASB. Amounts below are in NT$ unless stated otherwise.
Business context
ChipMOS provides semiconductor assembly, testing and bumping services, with operations primarily in Taiwan. Its four main segments are memory and logic/mixed-signal testing and assembly, display-panel-driver assembly and testing, and bumping. Display-panel-driver services were the largest segment in 2023 at 36.6% of revenue.
Financial performance and liquidity
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | NT$21,356m (US$697.5m) | NT$23,517m | -9% |
| Gross profit / margin | NT$3,549m / 16.6% | NT$4,912m / 20.9% | Margin down 4.3 percentage points |
| Operating profit / margin | NT$1,908m / 8.9% | NT$3,217m / 13.7% | -41% profit |
| Profit attributable to equity holders | NT$1,968m (US$64.3m); basic EPS NT$2.71 | NT$3,440m; basic EPS NT$4.73 | -43% profit |
| Operating cash flow | NT$6,607m | NT$8,616m | Down NT$2,009m |
| Capital expenditures | NT$3,228m | NT$4,919m | Down NT$1,690m |
Cash and cash equivalents were NT$12,354m at year-end, versus NT$9,897m a year earlier. Long-term bank debt was NT$14,912m, including NT$2,264m current; there were no short-term loans outstanding at year-end. All bank debt was floating-rate, at 1.2%–1.75%, and NT$11,271m was secured by assets. Undrawn bank facilities were approximately NT$13,696m at year-end, subject to facility terms and expiry dates. Management said cash, operating cash flow and available facilities should cover needs for the year following issuance of the financial statements, while cautioning that economic conditions make forecasting uncertain.
Total assets were NT$46,160m and total liabilities NT$21,397m; liabilities-to-assets increased to 46.35% from 45.18%. Cash dividends paid in 2023 were NT$1,673m, or NT$2.30 per share, compared with NT$3,127m in 2022. The filing reports no off-balance-sheet arrangements.
Changes versus the prior comparable year
- Revenue declined as weaker end-market demand and customer inventory adjustments reduced volumes, particularly in memory and assembly. Testing revenue fell 16%, memory/logic assembly 31%; display-panel-driver revenue rose 7%, and bumping revenue rose 5%.
- Capacity utilization weakened in memory/logic testing (58% versus 66%), assembly (46% versus 62%), and bumping (58% versus 63%). Display-panel-driver utilization improved slightly to 69% from 67%.
- Assembly recorded a gross loss of NT$672m, with a -14.5% segment gross margin, versus positive gross profit of NT$467m and a 7.0% margin in 2022. Management cited lower memory demand, underutilization and depreciation on capacity added in 2021–2022.
- Overall gross margin contracted as revenue fell faster than costs, reflecting the business’s high fixed-cost base. Non-operating income also declined, including lower foreign-exchange gains and a smaller share of associate earnings; higher interest income partly offset those declines.
- Capital expenditures fell to NT$3,228m, while depreciation and amortization remained elevated at NT$4,779m.
Outlook, material items and risks
- Outlook: The filing gives no quantified revenue, earnings or margin guidance. Management said conditions had become more stable by the end of 2023, but demand remained uncertain. Its stated priorities include higher-potential OLED, TDDI and automotive applications, advanced packaging and bumping technologies, and production efficiency and utilization.
- Unimos Shanghai sale: In December 2023, the board approved the sale of ChipMOS BVI’s entire 45.0242% stake for RMB979.3m in cash, payable in two installments. At year-end, the sale was not complete; the NT$4,279m investment was classified as held for sale. Completion was expected in the first half of 2024. The filing does not establish the eventual closing date or proceeds received.
- Customer concentration: The top five customers generated 61% of 2023 revenue; the top three generated 47%. Loss of, or reduced orders from, a major customer could materially affect results.
- Principal risks: Semiconductor cyclicality, pricing pressure, low utilization and fixed costs; memory-market exposure; floating-rate debt; customer concentration; currency movements; supply and equipment availability; competition; Taiwan-China geopolitical tensions; and natural disasters, utility disruptions and cybersecurity threats. The company reported no material cybersecurity incidents in the three years through 2023.
- Other items: The company acquired a 10% interest in Daypower Energy for NT$12.5m and obtained a board seat, after which it accounted for the investment under the equity method. No material litigation or significant disaster losses were reported for 2023.
- Audit: PwC Taiwan issued an unqualified opinion on the IFRS financial statements and concluded internal control over financial reporting was effective. The critical audit matter was estimating progress toward completion for assembly, display-panel-driver and bumping revenue; those services represented NT$16,962m of 2023 revenue.
Important facts for investors to verify
- Whether the Unimos Shanghai divestiture closed, the actual cash proceeds and installment timing, and any resulting gain, loss or tax effects.
- Whether utilization and profitability recover in memory/logic assembly, which was loss-making in 2023, and whether customer demand supports improved fixed-cost absorption.
- How customer concentration and order trends have changed since year-end, especially for the largest customers.
- Current cash, debt maturities, available credit facilities, borrowing costs and compliance with loan covenants.
- Whether 2024 demand in display panels, automotive, OLED and bumping offsets continued pricing pressure in other businesses.