SAN FRANCISCO After years' of obscurity in the chip packaging and test business, Taiwan's ChipMOS Technologies Bermuda Ltd. has finally moved into the limelight with plans on becoming the next $500 million player in the industry.
The provider of specialty packaging and test services raised eyebrows last week, when it acquired the assets of another Taiwanese subcontractor, First International Computer Testing and Assembly Technology Inc. (FICTA). The transaction is valued at approximately NT$1.1 billion (about $30 million) (see August 24 story).
The deal should generate $60-to-$70 million in sales for ChipMOS in 2005, said Satya Chillara, an analyst with RBC Capital Markets Inc., an investment banking firm, based here.
Hsinchu-based ChipMOS has already seen its sales soar from $188.9 million in 2002, to $375.9 million in 2003. In total, the company's revenues are projected to climb from $490.1 million in 2004, to $594 million in 2005, Chillara said in a recent report.
ChipMOS reported $0.32 a share on sales of $128.1 million in the second quarter of 2004. "Q3 guidance is revenues of $115-to-$120 million (and $0.13 a share), owing to a pause in the LCD driver IC packaging market," he said. Customers include Cypress, FASL, Macronix, Powerchip, ProMOS, Renesas, TI, and others.
Still, the overall projected growth could propel ChipMOS into the top-tier arena of the chip packaging industry. Among the elite class of providers with $500 million in annual sales or more include ASE, Amkor, STATS ChipPAC, and Siliconware. Ironically, Taiwan's Siliconware is an investor in ChipMOS.
While many of these companies are struggling amid a lull in the backend, ChipMOS continues to thrive as it focuses on a limited number of high-growth markets. The company has emerged as a leading packager of liquid-crystal display driver ICs for flat-panel displays.
"The company has been benefiting from strong growth in flat-panel displays as the industry continues to experience a capacity crunch," Chillara said. "LCD driver packaging revenue for ChipMos for the next two years is growing at a 25-40 percent."
And the company is scrambling to keep up with demand. "With certain customers, ChipMOS has entered into long-term, pay-or-take contracts," he said. "The company has secured 62 percent of its total capacity through 2005 and 2006 under these which we believe helps to shelter the company from swings in the industry. In the LCD business, 87 percent of ChipMOS' capacity is locked up with contracts."
It also provides chip-testing services for flash memory and DRAMs. ChipMOS is a "leader in memory testing with 30 percent of its business from flash," according to the analyst. "Company is benefiting from the continued strength in NAND and NOR flash. In addition, ChipMOS maintains a leadership position in DDR 2 memory testing where the company manages premium gross margins."