ChipMOS Technologies Inc. reported a return to profitability in its second-quarter 2026 results, driven by robust demand in artificial intelligence (AI) and memory sectors. The company posted revenue of $231.8 million (7.38 billion New Taiwan dollars), representing a 28.7 percent increase year-over-year and a record high quarterly level since 2014. Net profit attributable to equity holders rose 76.6 percent sequentially to $28 million (891.7 million New Taiwan dollars), compared to $15.9 million in the prior quarter. This turnaround reflects improved operating leverage, stronger pricing power, and enhanced product mix utilization.

The financial performance underscores a significant shift in the company’s operational dynamics. Gross margin expanded to 18 percent, up from 13.8 percent in the first quarter and 6.6 percent a year earlier. Earnings per basic American depositary share (ADS) reached $0.80, a substantial improvement from the loss of $0.47 per ADS reported in the corresponding period last year. Cash flow also strengthened, with net free cash inflow reaching $23.1 million (735.9 million New Taiwan dollars) during the first half of 2026. The company ended the period with $394.1 million (12.55 billion New Taiwan dollars) in cash and cash equivalents.

Financial Performance Overview

The key financial metrics for the quarter highlight the scale of the recovery:

*Note: Prior year revenue calculated based on 28.7% YoY growth from $231.8 million.

What the Numbers Show

The divergence between revenue growth and margin expansion indicates that ChipMOS Technologies is successfully leveraging its existing capacity. While sales grew by nearly 29 percent, the gross margin more than doubled year-over-year, suggesting that incremental revenue is contributing disproportionately to the bottom line. This pattern implies that fixed costs are being spread over higher volumes, while favorable product mix shifts—particularly in higher-margin AI and memory products—are boosting profitability. For analysts, this signals that the company may be entering a phase of accelerated margin expansion, provided volume growth continues at this pace.

Capacity Expansion and Strategic Investment

Chairman and President S.J. Cheng noted that demand continues to exceed capacity, particularly in AI-driven markets. To address this, ChipMOS is stepping up investment to capture rising demand from memory and AI-related markets. The company plans to expand memory assembly and testing bottleneck stations and invest in automation and AI across its operations. Additionally, ChipMOS acquired a new facility in Tainan Science Park to support memory customers’ capacity needs beginning in 2027. This facility will also support strategic expansion for mixed-signal customers and new product projects.

Management expects capital spending to exceed 25 percent of revenue in 2026, above its usual goal of about 20 percent. This increased spending is directed toward expanding memory assembly and testing capacity and investing in AI-related application-specific integrated circuits (ASICs) and silicon photonics. ChipMOS anticipates that capital spending will remain above 25 percent of revenue in 2027 as it continues investing for growth. The company also selectively raised memory outsourced semiconductor assembly and test pricing during the second quarter to offset higher material costs, reaching agreements with customers to pass through rising costs in memory and driver IC packaging and testing.

Market Outlook

Memory products gained momentum as customers restocked and assembly and testing utilization improved. ChipMOS expects DRAM growth to accelerate in the third quarter, supported by strong DDR4 demand and the ramp-up of DDR5 products. Flash momentum remains steady on seasonal stocking despite some customer inventory adjustments, although management expects it to trail DRAM growth. Meanwhile, seasonal OLED demand, automotive panels, and rush orders are expected to support improvement in the display driver integrated circuit business during the second half. Stock price action reflected these positive developments, with shares rising 12.40 percent to $56.00 following the results announcement.

ChipMOS Technologies Inc. will distribute a cash dividend of US$0.760 per American Depositary Share (ADS) on July 24, 2026, drawn from its capital surplus. Following the deduction of depositary fees by Citibank, N.A., shareholders will receive approximately US$0.740 per ADS. The announcement was made on July 20, 2026, from Hsinchu.

The company, listed on NASDAQ under the ticker IMOS, provides outsourced semiconductor assembly and test services (OSAT). It operates advanced facilities in Hsinchu Science Park, Hsinchu Industrial Park, and Southern Taiwan Science Park in Taiwan, serving fabless semiconductor companies, integrated device manufacturers, and independent semiconductor foundries globally.

Dividend Details

ADS holders are advised to verify receipt of payments with their securities brokers. Any inquiries regarding the dividend should be directed to Citibank, N.A.'s representative, Tiffany Ma.